“Taxing agriculture is a core component of the International Monetary Fund's new program for Pakistan and is critical to its success. If the commitment is not followed, the program’s success will be at risk”—Nathan Porter, the IMF's chief of mission for Pakistan, Pakistan’s IMF’s program ‘at risk’ if agriculture goes untaxed, Nikkei Asia, July 18, 2024

“At the same time, the provinces will take steps to increase their own tax-collection efforts, including in sales tax on services and agricultural income tax. On the latter, all provinces are committed to fully harmonising their Agriculture Income Tax regimes through legislative changes with the federal personal and corporate income tax regimes and this will become effective from January 1, 2025—IMF’s Press release No. 24/273, July 12, 2024

“Today, a mere 5% of large landholders in Pakistan are said to possess a massive 64% of the total farmland, while 65% of small farmers hold only 15% of the land (Nazeer 2015)”—Economy of Debt: Alternatives to Austerity and Neoliberalism in Pakistan [page 19]

 “…..the agricultural and population census shows that one percent of farmers in Pakistan own 22 percent of all farm area”—Hafiz Pasha, On Equity and Happiness: UNDP at the Lahore Literary Festival , February 26, 2019

Investing In Rural Women: The Missing Link In Pakistan’s Agricultural Transformation

“Instead of filing Agricultural Income Tax returns with the provincial governments, the same should be filed with the FBR that should solely assess/receive tax returns for agriculture and transfer it to the provinces as per their respective share like the gas development surcharge. Equity demands burden of taxation should be same for all”— Dr. Kaiser Bengali 

The provincial assemblies have the exclusive authority to impose taxes on “agricultural income” within their territories, except in areas that fall within the domain of the federal government, known as Islamabad Capital Territory (ICT), where right to levy all kinds of taxes rests with the National Assembly. 

Entry 47, Part I of Federal Legislative List [FFL] contained in the Fourth Schedule to the Constitution of Islamic Republic of Pakistan [“the Constitution’] reads: “Taxes on income other than agricultural income”. It empowers National Assembly to impose taxes on income, except “agricultural income”.  It also confirms that in terms of Article 142(c) of the Constitution, the provinces can impose taxes on “agricultural income”—except in ICT as mentioned in Article 1(b) of the Constitution.  

Within the ICT, the National Assembly has the exclusive power to levy taxes on “agricultural income” as provided in Article 142(d) of the Constitution, which says: “Majlis-e-Shoora (Parliament) shall have exclusive power to make laws with respect to all matters pertaining to such areas in the Federation as are not included in any Province”. Thus, the National Assembly can enact laws, including ones relating to taxes on “agricultural income” in all such areas not included in any province. 

The most pivotal question is how to construe and determine the scope of “agricultural income”. According to Article 260 of the Constitution, the expression “agricultural income” means, “as defined for the purpose of the law relating to income tax”.  This is an exclusive/exhaustive definition, thus no other meanings can be assigned to it, except those contained for the purpose of the law relating to income tax, which at present is Income Tax Ordinance, 2001—section 41(2) of it exhaustively defines what is “agricultural income” as under:

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