According to sources, the government has the potential to collect nearly Rs. 300 billion from agricultural income tax. The Federal Board of Revenue (FBR) has requested the provinces to align their agricultural income tax regimes with the federal schedule of income tax to facilitate the collection of agricultural income tax.
The provincial governments are expected to make legislative changes to align their Agricultural Income Tax (AIT) regimes with the Federal Personal Income (small farmers) and Corporate Income (Commercial Agriculture) tax regimes. They are aiming to start taxing agricultural income under this new regime from January 1, 2025.
In addition, the provinces plan to transition the services GST from a positive list to a negative list approach in order to combat tax evasion, set to take effect from the beginning of 2025-26. The collective goal is to increase revenues from corporate tax in agriculture and GST on services, along with expanding provincial tax efforts in other areas of revenue collection. The provinces also aim to implement administrative reforms to reduce the tax compliance gap, particularly for the general sales tax (GST).
Furthermore, the National Tax Council’s terms of reference will be expanded to include the design of relevant tax measures, such as property tax, and the necessary legal and administrative changes to implement them.
