ISLAMABAD: The Sindh government has taken a significant U-turn on implementing new agricultural income tax rates of up to 45%, deferring the IMF-agreed hike for one year. The Governor of Sindh has issued an ordinance to restore the old, maximum tax rate of 15%.
The official reason provided by the Sindh government is that the new rates could not be implemented starting January 1, 2025. This decision closely follows a similar move by the Punjab government, which suspended the new rates last month.
As a result of this U-turn, the agriculture sector—which constitutes nearly a quarter of the national economy—will continue to contribute only a few billion rupees in taxes. This stands in stark contrast to the salaried class, which paid 575 billion rupees in income tax during the 2024-25 fiscal year.
Under the restored ordinance, farmers will pay no tax on annual income up to 1.2 million rupees, double the 6 lakh rupee tax-free limit for salaried individuals. The maximum 15% tax will apply to agricultural incomes exceeding 4.8 million rupees, whereas the federal government taxes similar income brackets at rates as high as 45%. Critics argue this decision deepens economic inequality, leaving the heavy tax burden squarely on the salaried segment.
