Why farm income is a provincial matter
Under Pakistan's constitution, tax on agricultural income belongs to the provinces. FBR doesn't collect it. For decades, provincial agricultural income tax was low and lightly enforced. That changed in late 2024 and early 2025, when Punjab, Sindh, Khyber Pakhtunkhwa and Balochistan passed laws aligning their rates with the federal rates for non-salaried income, as part of Pakistan's IMF programme.
The slabs used here
| Agricultural income | Tax |
|---|---|
| Up to Rs 600,000 | Nil |
| Rs 600,001 – 1,200,000 | 15% of the amount above Rs 600,000 |
| Rs 1,200,001 – 1,600,000 | Rs 90,000 + 20% of the amount above Rs 1,200,000 |
| Rs 1,600,001 – 3,200,000 | Rs 170,000 + 30% of the amount above Rs 1,600,000 |
| Rs 3,200,001 – 5,600,000 | Rs 650,000 + 40% of the amount above Rs 3,200,000 |
| Above Rs 5,600,000 | Rs 1,610,000 + 45% of the amount above Rs 5,600,000 |
Example
Rana owns 25 acres of irrigated land in Sahiwal. After seed, fertiliser, diesel, labour and water charges, his yearly income from wheat and maize is Rs 2,500,000. His provincial agricultural income tax is Rs 170,000 + 30% of Rs 900,000 = Rs 440,000.
Small farmers
Most smallholders fall below the Rs 600,000 threshold once costs are deducted. The provincial laws also include landholding-based rules, so small landowners may pay a fixed per-acre amount rather than income-based tax. Check with your provincial revenue authority for details.
Livestock and other farm income
Income from livestock has also been brought into agricultural income tax under the new provincial laws. Large dairy and poultry operations should check whether their income falls under the provincial law or federal business tax, as the treatment depends on how the business is set up.
Filing
Agricultural income tax returns are filed with the province, for example through the Punjab Revenue Authority or the relevant provincial board. You should still declare agricultural income on your federal return to FBR, because it's part of your total wealth and affects how FBR sees your other income.
Keep good records
Tax is on income, not production. Keep records of what you spend on inputs, labour, rent and machinery, so the income you report reflects real profit. Sales receipts from commission agents (arhtis), mill receipts and bank deposits all help support your figures.
Provincial agricultural tax laws differ in detail and are new. This calculator gives an estimate based on the common slab structure. Confirm the exact rules for your province.
Land on lease
If you rent your land to a tenant farmer for a fixed amount of cash or crop, that lease money is your agricultural income, and the tenant's profit after paying you is theirs. Both may be liable under the provincial law. Written lease agreements make it much easier to show who earned what.
Selling the land
Selling agricultural land is a different matter. Gains on agricultural land have traditionally been treated differently from urban property, and provincial and federal rules may both be relevant, depending on location and use. Get advice before a large sale.
Why the change happened
For years, economists pointed out that agriculture makes up around a fifth of Pakistan's economy but paid a tiny share of income tax. Salaried city workers paid far more than large landowners with similar incomes. Bringing farm income onto the same slabs as other non-salaried income was a key condition of the IMF programme agreed in 2024. Enforcement is still building up, but the direction is clear, and large landowners in particular should expect closer scrutiny.
Related calculators
- Business tax calculator, for any non-farm business income, which is taxed by FBR.
- Rental income tax calculator, if you also earn rent from shops or houses.
- Filing guide, for declaring farm income on your federal return.
Frequently asked questions
Is agricultural income taxed in Pakistan?
Yes. Provinces tax it, and since 2025 they use the same slabs as federal non-salaried income for individuals.
Who collects agricultural income tax?
The provincial government, not FBR.
Is there a tax-free limit?
Yes. Agricultural income up to Rs 600,000 a year is taxed at 0% under the income-based slabs.
Do I report agricultural income to FBR?
You should declare it on your federal return and wealth statement, even though the tax is paid to the province.
Rates: Income Tax Ordinance 2001 and its schedules as amended by the Finance Act 2026, plus FBR's withholding tax rate card for Tax Year 2027. Results are estimates. Check with FBR or a tax adviser before acting on them.