Pakistan to Implement Agri Income Tax by July 2025: IMF Conditions Set

News Desk

Islamabad: The Government of Pakistan has committed to implementing a tax on agricultural income starting July 1, 2025, as reported by 24 NewsHD TV channel on Friday. 

This decision comes in response to a series of conditionalities set by the International Monetary Fund (IMF) as part of a new loan program finalized with the government.

The Ministry of Finance (MoF) has outlined plans to generate revenue amounting to Rs1,723 billion through additional taxes and duties in the current financial year.

According to the IMF, Rs357 billion is expected to be collected through personal and corporate income tax, while an end to sales tax exemptions is projected to yield Rs286 billion.

Additionally, the IMF revealed that an expansion of Withholding Tax (WHT) limits is anticipated to bring in Rs240 billion. Furthermore, sales tax exemptions will be fully withdrawn, and the sales tax rate will be increased from 5 percent to 10 percent.

As part of the IMF’s conditions, a 5 percent federal excise duty (FED) will be imposed on pesticides, along with an additional excise duty of 5 percent on fertilizers. The IMF indicated that provincial governments will need to amend agricultural laws so that provincial agricultural taxes align with the income tax and corporate tax collected by the federal government.

Sources from the IMF stated that these amendments should be completed by January 1, 2025, paving the way for the collection of agricultural income tax by the designated date.

Following these changes, the government will seek approval for a new national revenue accord, after which provincial governments will be tasked with managing higher education, health, and social security expenditures.

Provincial authorities will also be encouraged to enhance revenue through the establishment of a Tax Policy Office. Notably, the Pakistani government will refrain from announcing any amnesty schemes or tax exemptions.

The Ministry of Finance plans to secure parliamentary approval for an additional budget and will prepare a comprehensive report to curtail federal government intervention.

Furthermore, the current administration intends to privatize two Independent Power Producers (IPPs) and shut down the Capto Power Plant. An increase in gas tariffs is also expected during the first half of the current fiscal year.

The IMF concluded by stating that reforms will be introduced through amendments to the Sawan Wealth Fund Act to address loss-making enterprises, and a plan will be established to eliminate concessions granted to Special Economic Zones.