This article explains the two main taxes levied on agriculture in Khyber Pakhtunkhwa (KPK), Pakistan: Agricultural Income Tax and Land Tax. It’s important to remember that income tax on agriculture is a provincial matter, meaning it’s collected by the KPK government, while the federal government exempts such income from taxation.
Agricultural Income Tax
Agricultural Income Tax is levied on the net income generated from cultivating land. The Khyber Pakhtunkhwa Land Tax and Agricultural Income Tax Ordinance, 2000, outlines the tax rates based on income brackets. Here’s a breakdown:
Taxable Limit (Rupees) Tax Rate Up to 600,000 No Tax Over 600,000 but not exceeding 850,000 5% of amount exceeding Rs. 600,000 Over 850,000 but not exceeding 1,000,000 Rs. 12,500/- plus 7.5% of the amount exceeding Rs. 850,000 Over 1,000,000 but not exceeding 1,250,000 Rs. 23,750/- plus 10% of the amount exceeding Rs. 1,000,000 Over 1,250,000 but not exceeding 1,500,000 Rs. 48,750/- plus 15% of the amount exceeding Rs. 1,250,000 Over 1,500,000 Rs. 92,500/- plus 17.5% of the amount exceeding Rs. 1,500,000
Key Points:
- The tax burden increases progressively with higher income.
- Landowners are responsible for filing tax returns if their income exceeds a certain limit, as determined by the government.
Land Tax
Land Tax is a separate levy imposed on the ownership of agricultural land. The rates are based on the type and area of the land, as per the following categories:
- Slab of Total Cultivated Land (excluding orchards):
- Up to 1 acre: Exempt
- Between 1 acre and 12.5 acres: Rs. 225 per acre
- Exceeding 12.5 acres: Rs. 340 per acre
- Orchards: Rs. 900 per acre
Key Points:
- Smaller landholdings receive some tax relief.
- Orchards are taxed at a higher rate compared to regular cultivated land.
