Punjab govt proposes up to 233% increase in agriculture income tax, higher Abiana in finance bill

The Punjab government has proposed up to 233% increase in agriculture income tax and higher Abiana under the Punjab Finance Bill 2026 as part of efforts to widen the provincial tax base and create additional fiscal space.

The bill proposes a uniform agriculture income tax of Rs1,000 per acre for landowners holding more than 12.5 acres.

At present, agriculture income tax is charged at Rs300 per acre on holdings between 12.5 and 25 acres, Rs400 per acre on holdings between 25 and 50 acres and Rs500 per acre on holdings exceeding 50 acres.

This means the proposed tax would increase by 233.33% for landholdings between 12.5 and 25 acres, 150% for holdings between 25 and 50 acres and 100% for holdings above 50 acres.

Tax rates on orchards have also been revised. The levy on irrigated orchards has been proposed at Rs1,000 per acre, up from Rs600, while tax on non-irrigated orchards has been increased from Rs300 to Rs500 per acre.

The bill also proposes replacing the existing crop-based Abiana system with a flat-rate regime. Under the new structure, water charges will be fixed at Rs1,650 per acre for the Kharif season and Rs850 per acre for the Rabi season.

An additional irrigation charge of Rs2,000 per acre annually has been proposed for approved orchards. Water supplied through government or private lift irrigation schemes will be charged at Rs2,250 per acre per year.

The Punjab government has set a tax collection target of Rs748.70 billion, which is 42.69% higher than last year’s target of Rs524.70 billion.

The bill also includes a relief measure for the cotton sector by abolishing the cotton fee levied under the Punjab Finance Act, 1973.

The seasonal charge on raw cotton arriving at ginning factories has been removed in view of declining cotton production and the closure of a large number of ginning units in recent years.