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Pakistan's Khyber Pakhtunkhwa province passes Agricultural Income Tax Bill

The bill imposes taxes of up to 40%

Pakistan's Khyber Pakhtunkhwa province passes Agricultural Income Tax Bill

The KP Agricultural Income Tax Bill 2025 introduces a progressive tax structure on agricultural earnings

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The provincial assembly of Khyber Pakhtunkhwa — located in Pakistan's northwest — has passed the KP Agricultural Income Tax Bill 2025, introducing a progressive tax structure on agricultural earnings. This is an important but largely unnoticed development that are part of Pakistan's economic reforms.

The bill imposes a 15% tax on income between PKR 600,000 and PKR 1.2 million, 20% on PKR 1.2 million to PKR 1.6 million, 30% on PKR 1.6 million to PKR 3.2 million, and 45% on income above PKR 5.6 million.

Additionally, individuals earning over PKR 150 million annually will be subject to a super tax, targeting wealthier landowners, aiming to reduce inequalities.

The law also includes transparency measures, requiring landowners with multiple properties to disclose their locations. Those with more than 50 acres of cultivated or 100 acres of uncultivated land will be taxed.

Khurram Schehzad, advisor to the finance minister, tweeted about the bill's importance, calling it "a significant step toward economic reform, showing that Pakistan's economy comes first, beyond any political differences".

Punjab has already implemented a similar agricultural tax, so KP's move signals a growing provincial role in economic policymaking. Sindh and Balochistan are expected to follow suit, potentially paving the way for a unified national approach.

Agriculture contributes about 20% of Pakistan's GDP, and taxing the sector equitably and transparently could help generate much-needed revenue for development.

As part of its agreement with the International Monetary Fund (IMF) for the $7 billion Extended Fund Facility, Pakistan was required to start bringing previously untaxed sectors, such as agriculture, into the tax net.

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