The government, in collaboration with provincial authorities, is set to tap into a potential Rs300 billion from agricultural income tax. The Federal Board of Revenue (FBR) has called on provinces to adopt the federal income tax schedule to streamline the collection of agricultural income tax.
As per report, the plan involves provincial governments amending their Agricultural Income Tax (AIT) regimes to align them with the federal tax structure, covering both personal income tax for small farmers and corporate income tax for commercial agriculture. The new tax regime is expected to take effect from January 1, 2025, following necessary legislative changes.
Additionally, provincial governments will transition their services General Sales Tax (GST) system from a positive list to a negative list approach, aimed at reducing tax evasion. This shift is slated for the 2025-26 fiscal year.
Provinces are targeting increased revenues from corporate taxes in the agricultural sector, along with GST on services, as part of a broader strategy to expand provincial tax collection efforts. This includes developing and implementing a unified property taxation system.
Provincial governments are also expected to introduce administrative reforms to reduce the tax compliance gap, particularly in GST collection.Â
The National Tax Council will expand its terms of reference to include the design of tax measures, such as property tax, and the necessary legal and administrative adjustments for their implementation, sources added.
