Tax Rates on Agricultural Income in Khyber Pakhtunkhwa

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:

  • Income up to Rs. 400,000: Exempt from tax.
  • Income between Rs. 400,000 and Rs. 550,000: 5% tax on the amount exceeding Rs. 400,000.
  • Income between Rs. 550,000 and Rs. 750,000: Rs. 7,500 + 7.5% tax on the amount exceeding Rs. 550,000.
  • Income between Rs. 750,000 and Rs. 950,000: Rs. 22,500 + 10% tax on the amount exceeding Rs. 750,000.
  • Income between Rs. 950,000 and Rs. 1,100,000: Rs. 42,500 + 15% tax on the amount exceeding Rs. 950,000.
  • Income exceeding Rs. 1,100,000: Rs. 65,000 + 17.5% tax on the amount exceeding Rs. 1,100,000.

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.

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