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Punjab continues to collect land-based agriculture tax inspite of introduction of Income Based Tax: Minister


Punjab continues to collect land-based agriculture income tax; but due to lack of appropriate systems, however, it was never able to comply with the 2001 amendment that stipulated that tax would be land or income-based depending on whichever is higher. This was stated by Punjab Finance Minister Dr Ayesha Ghaus Pasha .

Dr Pasha said that "we tried to persuade holders of 50 acres or more to file income tax returns. However, this could not be implemented due to procedural bottlenecks and now the provincial government is trying to put in place a computerised system backed by collection of accurate information of income (inclusive of regional variations) and expenditure (including input costs) by the end of this calendar year." Dr Pasha re-emphasised that "the land-based tax is agriculture income tax which has not been withdrawn by the provincial government and a mechanism is being developed to improve its collection".

Member Tax Policy Board of Revenue Punjab Asad Ikram Mani stated that no notification has been issued by the provincial government suspending collections of agriculture income tax. The issue is under discussion at the committee level in the provincial assembly, he added, and if any decision had been taken in this regard, the matter would have been referred to the Punjab Assembly for legislation. Only Punjab Assembly can decide to suspend agriculture income tax and it cannot be done through an order or notification, Member Tax Policy Board of Revenue Punjab added.

However, sources within the provincial government told on condition of anonymity that Rana Sanaullah, the Provincial Minister for Law and Parliamentary Affairs, did chair a meeting where it was decided to suspend collection of agriculture income tax and sources claim that a notification to that effect was issued.

When contacted officials of Ministry of Finance and FBR stated that provinces are not required to take the federal government on board on subjects which are the domain of provinces and agriculture income tax is a provincial tax as per Article 162 of the Constitution.

The Punjab Agricultural Income Tax Act (AIT) 1997 was land based and the rates provided in the First Schedule to this Act stipulated that if ownership was up to 12.5 acres there would be no tax, where it is more than 12.5 acres but less than 25 acres, tax would be levied at the rate of Rs 150 per acre and land beyond 25 acres would be taxed at the rate of Rs 250 per acre.

The AIT was amended in 2001 and stipulated that tax would be land or income-based depending on whichever is higher. The 2001 amendment introduced following slabs;

1- Exempt from tax if income is up to Rs 80,000;
2- Rate of tax will be 5% where income exceeds Rs. 80,000/- but did not exceed Rs 100,000
3- Where income exceeded Rs 100,000 but did not exceed Rs 200,000 tax would be payable at Rs 5,000 plus 7.5% of amount exceeding Rs 100,000;
4- where income exceeded Rs 200,000 but not Rs 300,000, it was Rs 12,500 plus 10% of amount exceeding Rs 200,000
5- Where total income exceeded Rs 300,000 it was Rs 22,500 plus 15% per cent of the amount exceeding Rs 300,000.
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