Introduction
The Sindh Agricultural Income Tax Act, 2025 constitutes the province’s principal statutory instrument for taxing agricultural receipts. It introduces a two-tier fiscal mechanism the First Schedule (base agricultural income tax) and the Second Schedule (super tax) accompanied by procedural rules for registration, return filing, assessment and enforcement. This commentary examines every material aspect of the Act as relevant to practitioners, agribusinesses and individual farmers, and provides concrete, digit-by-digit worked examples.
1. Scope and Definitions
Agricultural income (Section 2(1)(a), generally construed) includes:
Rent or revenue from land situated in Sindh;
Income from cultivation, farming operations and sale of produce raised by the cultivator;
Income of a person deriving benefit from farm buildings used for agricultural activity.
Key distinctions: Income from processing (e.g., milling, ginning) that converts raw produce into marketable industrial goods ordinarily falls outside “agricultural income” and is taxed under the federal Income Tax Ordinance, 2001.
2. Chargeability and Taxable Person
Charge of tax: Section 3(1) charges agricultural income to tax for each tax year at rates provided in the Act and the Schedules.
Who is a taxable person?
Natural persons, firms, associations, corporate entities deriving agricultural income;
Lessees or contract farmers deriving agricultural income;
Estate administrators to the extent income accrues to an estate.
Exemptions by design: Small cultivators and holdings within prescribed limits (see exemptions below) are exempt from registration and tax.
3. FIRST SCHEDULE — Rates of Agricultural Income Tax (verbatim transcription)
| Sr. No. | Taxable income (total agricultural income) | Rate / Formula |
|---|---|---|
| 1 | Where the total income does not exceed Rs. 600,000/- | 0% |
| 2 | Where the total income exceeds Rs. 600,000/- but does not exceed Rs. 1,200,000/- | 15% of the amount exceeding Rs. 600,000/- |
| 3 | Where total income exceeds Rs. 1,200,000/- but does not exceed Rs. 1,600,000/- | Rs. 90,000/- + 20% of the amount exceeding Rs. 1,200,000/- |
| 4 | Where total income exceeds Rs. 1,600,000/- but does not exceed Rs. 3,200,000/- | Rs. 170,000/- + 30% of the amount exceeding Rs. 1,600,000/- |
| 5 | Where total income exceeds Rs. 3,200,000/- but does not exceed Rs. 5,600,000/- | Rs. 650,000/- + 40% of the amount exceeding Rs. 3,200,000/- |
| 6 | Where total income exceeds Rs. 5,600,000/- | Rs. 1,610,000/- + 45% of the amount exceeding Rs. 5,600,000/- |
Company rates (proviso):
Small company: 20%
Any other company: 29%
4. SECOND SCHEDULE — Super Tax (verbatim transcription)
| S. No. | Agricultural income for purposes of levy of super tax | Rate of super tax |
|---|---|---|
| 1 | Up to Rs. 150,000,000 | 0% |
| 2 | Rs. 150,000,001 – 200,000,000 | 1% |
| 3 | Rs. 200,000,001 – 250,000,000 | 2% |
| 4 | Rs. 250,000,001 – 300,000,000 | 3% |
| 5 | Rs. 300,000,001 – 350,000,000 | 4% |
| 6 | Rs. 350,000,001 – 400,000,000 | 6% |
| 7 | Rs. 400,000,001 – 500,000,000 | 8% |
| 8 | Above Rs. 500,000,000 | 10% |
Note: Super tax is calculated on agricultural income separately and added to the First Schedule liability.
5. Computation of Net Agricultural Income — Deductible Items
Net agricultural income is computed after allowing deductions that are wholly and exclusively incurred for cultivation and production. Typical deductions include:
Land revenue and local rates;
Cost of seeds, fertilizers, pesticides, agricultural chemicals;
Wages of labour engaged in cultivation;
Irrigation expenses;
Depreciation on agricultural implements and machinery used exclusively for farming;
Interest on capital borrowed for cultivation (subject to rules).
Maintain vouchers and ledger postings for each deduction — documentary proof is decisive in assessments and appeals.
6. Registration and Filing Procedures
Who must register:
Persons whose agricultural income exceeds Rs. 600,000 per annum;
Landholders exceeding 25 acres irrigated or 50 acres unirrigated;
All companies and large leaseholders regardless of acreage.
Return filing:
Annual return (Form A or the prescribed form) — due date commonly by 30 September following the tax year (confirm current SBR notification for exact date).
Attach a statement of landholding, crop yield, input expenses and bank sale receipts.
Payment:
Tax is paid through designated bank challans or online payment gateways integrated with SBR. Advance or instalment provisions may apply by notification.
7. Assessments, Audits and Best-Judgment
Assessment process:
Self-assessment supported by documentary proofs; tax authorities may issue notices for information.
Where returns are not furnished or are materially incorrect, assessing officers may perform best-judgment assessments under Section 11.
Audits and verification:
The Act authorises inspections, audits and demand notices. GIS-based land mapping and QR-coded landholding certificates are part of the 2025 enforcement architecture.
8. Penalties, Offences and Prosecution
Typical enforcement provisions include:
Penalty up to 50% of tax payable for failure to file or furnish returns;
Fines and, in cases of fraud or concealment, potential prosecution with imprisonment (statutory limits vary in the Act).
Recovery of tax as arrears of land revenue, enabling distraint and attachment of assets.
9. Appeals and Dispute Resolution
Appeal ladder:
Commissioner (Appeals) — first tier (time limits generally 30 days from the order).
Sindh Agricultural Income Tax Appellate Tribunal — second tier.
High Court — on substantial questions of law or jurisdiction.
Ensure timely stays and provisional payments when appealing to avoid additional recovery actions.
10. Interaction with Federal Taxation
When a taxpayer has both agricultural and non-agricultural income, the aggregated income may influence federal tax rates (i.e., marginal rate determination under the Income Tax Ordinance, 2001). Agricultural income remains provincially taxable but is included in the computation base for federal purposes in relevant circumstances — advise consolidated computations to clients.
11. Transitional and Special Provisions
Where the Act contains transitional provisions (e.g., treatment of assessments begun under earlier law), apply the most recent statutory text. For disaster relief, Section 9 allows remission or suspension of tax in declared calamity areas — secure the official notification before claiming relief.
12. Recordkeeping and Best Practice
Recommended records:
Land ownership / tenancy documents;
Detailed input invoices;
Labour wage registers;
Sales receipts / market vouchers;
Bank statements reflecting sale proceeds;
Copies of electronic filings and challans.
Retain records for seven years or as required by SBR rules.
13. Worked Examples — Digit-by-digit Arithmetic
Example A — Individual (Income Rs. 3,000,000):
Applicable: First Schedule Sr. No. 4.
Income = 3,000,000.
Excess over 1,600,000 = 3,000,000 − 1,600,000 = 1,400,000.
30% of 1,400,000 = 0.30 × 1,400,000 = 420,000.
Add base amount 170,000 + 420,000 = 590,000.
Super tax? 3,000,000 < 150,000,000 → super tax = 0.
Total payable = Rs. 590,000.
Example B — Small Company (Income Rs. 10,000,000):
Company rate = 20%.
Tax = 0.20 × 10,000,000 = 2,000,000.
Super tax? 10,000,000 < 150,000,000 → super tax = 0.
Total payable = Rs. 2,000,000.
Example C — Large Agribusiness (Income Rs. 420,000,000):
First Schedule computation:
Income = 420,000,000.
Excess over 5,600,000 = 420,000,000 − 5,600,000 = 414,400,000.
45% of 414,400,000 = 0.45 × 414,400,000 = 186,480,000.
(Compute: 414,400,000 × 45 = (414,400,000 × 40) + (414,400,000 × 5)
= 16,576,000,000 + 2,072,000,000 = 18,648,000,000 ÷ 100 = 186,480,000.)Base amount = 1,610,000.
First Schedule tax = 1,610,000 + 186,480,000 = 188,090,000.
Second Schedule (Super tax):
420,000,000 falls in Rs. 400m–500m bracket → 8%.
Super tax = 0.08 × 420,000,000 = 33,600,000.
Total payable = 188,090,000 + 33,600,000 = Rs. 221,690,000.
14. Frequently Asked Questions
Q: Who must register?
A: Persons with agricultural income > Rs. 600,000, land > 25 acres (irrigated) or > 50 acres (unirrigated), companies and lessees deriving agricultural income.
Q: Are calamity losses recognised?
A: Yes — relief may be granted under Section 9 upon official declaration.
Q: Does agricultural income affect federal tax?
A: Yes — it can influence marginal rates where taxpayers have mixed income streams.
15. Practitioner Checklist (For Client Advising)
Register early and obtain AITN (agriculture income tax number)
Keep granular input and sale documentation.
Prepare slab worksheets showing base, excess and percentage arithmetic.
Project super tax exposure if incomes are large.
File electronically and keep proof of payment.
Engage counsel early where audits or notices are issued.
The Sindh Agricultural Income Tax Act, 2025 imposes clear, enforceable obligations while affording protections for small farmers. For legal advisors and tax consultants, the Act demands a disciplined compliance regimen — precise computation, robust recordkeeping and strategic planning for super tax exposure. Implement these practices to mitigate risk and fulfil statutory obligations with confidence.
Author Bio
Tanweer Habib (Tax Consultant) — Practising counsel in taxation and corporate law with specialised advisory experience in federal/provincial levies and agricultural tax assessments. Advises agribusinesses, cooperatives and private farmers across Sindh.
Disclaimer
This commentary is informational and does not constitute legal or tax advice. For tailored guidance, consult a licensed tax practitioner or advocate. The author assumes no liability for decisions made on the basis of this material.
