The proposed agricultural income tax rates in the draft bills reflect a steep increase, especially for high-income farmers and landlords. According to the draft, the tax rates are structured as follows:
- Individual Tax Rates:
- Income between PKR 600,000 and PKR 1.2 million: 15% tax
- Income up to PKR 1.6 million: 20% tax
- Income up to PKR 3.2 million: 30% tax
- Income up to PKR 5.6 million: 40% tax
- Income above PKR 5.6 million: 45% tax
- Super Tax Rates for High-Income Landlords:
- Income between PKR 150 million and PKR 200 million: 1% super tax
- Income up to PKR 250 million: 2% super tax
- Income up to PKR 300 million: 3% super tax
- Income up to PKR 400 million: 6% super tax
- Income up to PKR 500 million: 8% super tax
- Income above PKR 500 million: 10% super tax
- Land Ownership Tax: Landowners will face a tax ranging from PKR 500 to PKR 3,500 per acre.
Increased Penalties and Stricter Enforcement
To enhance tax compliance, the draft bills propose stricter penalties for defaults and non-payment. Key enforcement measures include:
- Extended Audit Period: The provincial government can open a farmer’s or landlord’s tax return for up to four years, instead of the current two years.
- Daily Penalties for Non-Filing: If a taxpayer fails to submit a tax statement, they could incur a daily penalty of 0.1% of the outstanding tax or PKR 1,000 per day of delay, with minimum penalties set at PKR 10,000 for incomes up to PKR 1.2 million, PKR 20,000 for incomes up to PKR 40 million, and PKR 50,000 for incomes over PKR 40 million.
- Default Surcharge: A surcharge on late or non-payment of tax at 12% per annum or the Karachi Interbank Offered Rate (KIBOR) plus 3%, whichever is higher.
