Pakistan fulfills IMF condition with new agricultural income tax legislation

Pakistan government has apprised the International Monetary Fund (IMF) of the legislation on agricultural income tax, which is one of the conditions set by the fund.

At a meeting with IMF, Pakistan side confirmed equating the tax rate with that of the corporate sector.

Significant legislative actions have been taken by all four provinces to increase the agricultural income tax rate. The same rate has been maintained across all provinces.

IMF was informed that that no tax will be imposed on annual agricultural income up to PKR 600,000.

For annual agricultural income from PKR 600,000 to PKR 1.2 million, a 15% tax will be imposed. A fixed tax of PKR 90,000 will apply to annual agricultural income from PKR 1.2 million to PKR 1.6 million, while a 20% tax will be levied on income above PKR 1.2 million within this slab.

For income from PKR 1.6 million to PKR 3.2 million, a fixed tax of PKR 170,000 will be imposed, with a 30% tax on income above PKR 1.6 million within this range.

For income from PKR 3.2 million to PKR 5.6 million, a fixed tax of PKR 650,000 will apply, with a 40% tax on income above PKR 3.2 million within this bracket.

A 45% tax will be imposed on annual agricultural income above PKR 5.6 million.

Policy Talks

In a special session with the State Bank of Pakistan, IMF was briefed on the target for net foreign exchange reserves to reach $13 billion by June 2025. The IMF was also informed of the foreign exchange reserves target for December 2025.

Discussions covered Pakistan's financial policy, economic situation, policy rates, external loans, and regulatory measures. The IMF was assured that the dollar exchange rate against the rupee will remain market-based.

IMF acknowledged Pakistan's legislation for anti-money laundering, and the State Bank's effective implementation of the banking regulatory framework, meeting IMF conditions.

Khyber Pakhtunkhwa Revenue Authority Briefs IMF

Khyber Pakhtunkhwa has undertaken over 50 new measures to increase provincial revenue. In the past six months, provincial revenue increased by over PKR 14 billion.

IMF was informed a special cess for infrastructure repair has been imposed, generating significant revenue. A transit cess on exports is expected to generate PKR 10 billion. For the first time in the current fiscal year, Khyber Pakhtunkhwa's provincial revenue is exceeding PKR 100 billion, IMF was informed.