Frequently asked questions - AIT
1. When will the Sindh Agricultural Income Tax Act, 2025 be effective?
The Sindh Agricultural Income Tax Act, 2025 is a provincial law enacted to modify and enforce tax on agricultural income within the Province of Sindh with effect from 1st January 2025.
2. Are the provisions of previous Agricultural Income Tax Acts still applicable and valid?
No. The new Sindh Agricultural Income Tax Act, 2025 repeals and replaces the Sindh Agricultural Income Tax Ordinance, 2001 with effect from 1st January 2025.
3. Which authority is responsible for collecting Agricultural Income Tax in Sindh?
The Sindh Revenue Board (SRB) is now responsible for collecting Agricultural Income Tax in Sindh under the Sindh Agricultural Income Tax Act, 2025. It has replaced the Board of Revenue (BOR), which previously handled tax collection through local revenue officials such as Mukhtiarkars and Tapedars.
4. Who is considered taxable or liable to pay Agricultural Income Tax under this Act?
An owner as defined Sindh Agricultural Income Tax Act, 2025 including an individual, a company, a cooperative society, tenant or lessees, who earns agricultural income above PKR 600,000 is liable to pay tax under this Act.
5. What qualifies as “agricultural income”?
The term agricultural income is defined in section 2 of the Sindh Agricultural Income Tax Act, 2025. It means:
(i) any rent or revenue derived from land which is situated in the Province of Sindh and is used for agricultural purposes.
(ii) any income derived from such land by:
(a) agriculture, or
(b) the performance on such land by a cultivator or receiver of rent-in-kind or any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market, or
(c) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii).
(iii) Any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator or the receiver of rent-in-kind, of any land with respect to which, or the produce of which any operation mentioned in paragraphs (ii) and (iii) is carried on:
Provided that the building is on or in the immediate vicinity of the land, and is a building which the receiver of the rent or revenue or the cultivator, or the receiver of the rent-in-kind by reason of his connection with the land, requires as a dwelling house, or a store house or other out building:
(iv) Any income declared as Agricultural Income in any return or statement or declaration made under the Income Tax Ordinance 2001.
6. Are small-scale farmers exempt from agricultural income tax?
Sindh Agricultural Income Tax Act, 2025 has done away with the concept of land-based taxation. Now an owner is chargeable to tax based on the income earned during an income year. Small-scale farmers may be exempt from agricultural income tax if their income is below the exemption threshold of PKR 600,000. However, if they earn income above this threshold, they are chargeable to the AIT.
7. Does the Act apply to individuals, partnerships, and corporations?
The Act recognizes an ‘owner’ as someone who is liable to pay agricultural income tax. The concept of ‘owner’ under the Act is different from the owner of land under common parlance. An ‘owner’ is a person that earn agricultural income during an income year which includes income from owned or leased land or rent-in-kind.
An owner includes a company, a cooperative society, a member of a firm or association of person, and an individual who may be a mortgagee or a lessee or a tenant in possession or in control of the land, or any other person in possession or in control of the land including Government land or owner of any private land.
Please note that where any land is owned by more than one whether as member of a firm or association of persons or otherwise, every one of these persons is an owner individually to the extent of his or her share in the land.
8. Are non-residents subject to agricultural income tax in Sindh?
Non-residents earning agricultural income above the taxable threshold in Sindh are subject to tax under the Act. As per Section 4 of Sindh Agricultural Income Act, the agricultural income tax shall be payable by the “owner” whether or not resident of the Province of Sindh.
9. What is the deadline for filing the Agricultural Income Tax Return?
The due date for filing the annual return is 30th September following the end of each Agricultural Income Year. FY 2024–2025 has however been divided into two halves i.e. from 1st July 2024 to 31st December 2024 and from 1st January 2025 to 30th June 2025. Relevant rates will be applicable to each half.
An owner as defined Sindh Agricultural Income Tax Act, 2025 including an individual, a company, a cooperative society, tenant or lessees, who earns agricultural income above PKR 600,000 is liable to be registered with the Sindh Revenue Board.
10. How do I register for Agricultural Income Tax?
SRB is developing an online registration module, which will be made available soon. Upon registration, you will be issued an Agricultural Income Tax Number (AITN).
11. What documents are needed for registration?
Please keep your identification document such as CNIC or registration number, land ownership or tenancy details, bank account information, contact details and mailing address with yourself while filling out the registration form.
12. What is the Agricultural Income Tax Number (AITN)?
AITN is a unique identifier for taxpayers under the Act. It may be:
- NIC or NTN for individuals,
- NTN and SECP registration for companies.
13. Can farmers who are not required to pay tax still register?
Farmers can register voluntarily to facilitate future tax payments or for documentation purposes.
14. What is the difference between an agricultural income year and assessment year?
An agricultural income year is a period of generally twelve (12) months starting from July 1 or any other date approved by SRB for an owner during which an owner earns agricultural income. An assessment year is also a period of twelve (12) months immediately following the agricultural income year in which the return of agricultural income is filed and the tax is paid.
15. What is the rate of tax and super tax under the Act?
Rates of tax and super tax on agricultural income are provided in the First and Second Schedules of the Act. Super tax applies to high-earning owners in addition to standard agricultural income tax.
16. Are there any deductions or allowances available?
An exhaustive list of deductions and allowance is provided in section 7 of the Sindh Agricultural Income Tax Act, 2025. However, please avoid claiming capital, personal or administrative expenses against the agricultural income.
17. What are exemptions available in the AIT regime?
Certain owners, areas or incomes may be exempt from the levy of AIT under the Sindh Agricultural Income Tax Act, 2025. Some of these exemptions are granted by the Government of Sindh through official notifications.
- Small landholders below the threshold of taxable income,
- Land in calamity-hit areas, and
- Specific government-notified persons or classes of persons.
18. Are livestock, dairy, poultry, and fishery incomes exempt from Sindh AIT?
Currently, income derived from livestock, dairy, poultry, and fishery is not taxable under the Sindh Agricultural Income Tax Act, 2025.
19. What is the penalty for late filing of returns?
Please file your return of agricultural income on time. The penalty for non-filing is 0.1% of the tax due per day or Rs. 1,000 per day, whichever is higher. This penalty is subjected to the following conditions:
- Maximum amount of penalty of PKR 10,000 if the income is less than PKR 1.2 million,
- Maximum amount of penalty of PKR 50,000 if the income is more than PKR 1.2 million and less than PKR 40 million, and
- Maximum amount of penalty of PKR100,000 if the income is greater than PKR 40 million.
20. What is the penalty for concealment of income?
A penalty equal to the amount of tax evaded may be imposed if it is found that income is concealed or misreported.
21. Can losses be carried forward?
Losses incurred due to calamities in the ‘calamity-hit areas’ can be carried forward and adjusted against income of the next three years. Please note that the ‘calamity-hit areas’ are notified by the Government.
22. What are the calamity-hit areas?
A calamity-hit area is a region officially declared by the government to have been affected by a natural disaster like floods, droughts, or other emergencies. In such areas, the AIT may be reduced or exempted based on official notification.
23. What happens if I pay the amount of tax late?
A default surcharge is payable in such instance at 12% per annum or KIBOR + 3%, whichever is higher, on the unpaid amount. Please pay your dues on time.
24. Who will assess and collect the tax?
The Agriculture Income Tax Return will be as “self-assessed” declaration from the owner filing it. Officers of the Sindh Revenue Board (SRB) designated as Agricultural Income Tax Officers (AITO) can re-assess the declaration in case of misreporting or under-declaration.
25. Do I have to visit the Tapedar or Mukhtiarkar to register or file AIT?
You do not need to visit any authority for registration and filing with the SRB. These services will be made available online at ait.srb.gos.pk.
26. What is the payment method for AIT?
Once the SRB develops a payment solution, you will be able to pay the AIT amount through 1Link system using a PSID from the SRB system and over the counter at any bank.
27. Is a civil court allowed to intervene in tax matters under this Act?
Civil courts do not have jurisdiction over matters related to assessment or collection of AIT.
28. What if a person disagrees with the assessment or penalty imposed by the officer of SRB?
The person may file an appeal with the Commissioner (Appeals) and so on according to the procedures adapted from the Sindh Sales Tax on Services Act, 2011.
29. What is the process for filing appeal regarding an agricultural income tax assessment?
Taxpayers may file an appeal with the SRB’s Commissioner (Appeals) if they disagree with the assessment made by an Officer of the SRB. The appeal must be submitted in the prescribed form and manner to the relevant Commissioner (Appeals) of the SRB. These forms are available at the web address https://www.srb.gos.pk/srb/forms.
30. What is the Prescribed time for filing of an appeal?
An appeal should be filed within 30 days from the date of receipt of the assessment order.
31. Are the provisions of Sindh Sales Tax on Services Act 2011 applicable to the proceedings under Sindh Agricultural Income Tax Act, 2025?
Certain provisions of the Sindh Sales Tax on Services Act, 2011 related to registration, assessment, audit, enforcement, recovery, appeals, etc. apply mutatis mutandis to the Sindh Agricultural Income Tax Act, 2025.
32. Can the SRB delegate its powers and functions?
The SRB may delegate any of its powers and functions to any department of Government or agency for the implementation of this Act.
33. Will agricultural income tax returns be audited?
The SRB can audit AIT returns to ensure compliance with the provisions of the law.
34. What triggers an audit of agricultural income tax returns?
An audit can be triggered due to a number of reasons such as legal and accounting discrepancies observed in the AIT return, underreporting noticed or non-compliance with the provisions of the Act.
35. Is there an alternative dispute resolution mechanism under the Act?
The owners may file appeal against an assessment order. The forum of Commissioner (Appeals) represents internal review mechanism of the SRB.
36. Are agricultural workers subject to tax under the Act?
Agricultural workers, who receive salaries or wages for their labor, are not subjected to agricultural income tax. The scope of the Act does not cover employment income. However, lease income i.e. Maqada is taxable.
37. Is income from agri-based industries taxable under the Act?
The AIT is applicable to the income derived from ownership, tenancy and operations of agricultural land. Any which is other than such income is not considered agricultural income and is therefore not taxable under the Sindh Agricultural Income Tax Act, 2025. Such income may, however, be taxable under other relevant laws.
38. Are foreign investors in agriculture required to pay taxes?
Foreign investors deriving agricultural income from land situated in Sindh are liable to pay agricultural income tax under the Act if their income exceeds the prescribed threshold.
39. Is there a special tax regime for organic farming?
The Act does not provide a separate tax regime for organic farming. All farming activities are taxed uniformly under the Act.
40. Are agricultural subsidies taxable?
Agricultural subsidies that are directly linked to land income or crop production may be treated as part of agricultural income and thus taxable under the Act. However, the taxability depends on the facts and circumstances of each case.
41. Can a person be exempt from agricultural income tax if they are not directly engaged in agriculture?
Individuals who do not own, lease, rent or operate agricultural land and whose income does not arise directly from agricultural operations, may not be chargeable to tax under the Act. However, passive members of a firm or AOP are subjected to tax. The SRB will assess each case based on its facts and circumstances.
42. Is income from fruit orchards taxable?
Income from fruit orchards is considered agricultural income and is taxable under the Act if it exceeds the prescribed exemption threshold.
43. Are there any tax incentives for investing in sustainable agricultural practices?
Currently, the Act does not provide any tax incentives for investments in sustainable and environmentally friendly agricultural practices, other than the claim of depreciation for building, machinery and plant under section 7 of the Act.
44. Are there any provisions for farmers with low income or poor farmers?
The Act provides exemption for small farmers earning income below the threshold of PKR 600,000. Besides, lower incomes are subjected to reduced rate of tax brackets.
45. Are there any changes in tax treatment for new types of crops or technologies?
There is no special tax treatments for new varieties of crops or technologies under the Act.
46. Can the SRB request additional documentation from taxpayers?
The SRB may request additional documentation or information from taxpayers during the process of assessment, audit or verification to ensure compliance with the Act. Please make sure that any legal notice from the SRB bears a QR code in order to avoid scams.
47. What records must be maintained by agricultural taxpayers?
Agricultural taxpayers are required to maintain records of income, expenses, land ownership or tenancy agreements, crop production and other documentation relevant to their agricultural operations. These records must be retained for the prescribed period.
48. How long should taxpayers keep records of agricultural income for tax purposes?
Taxpayers should maintain records for a minimum of five years after the end of the tax year to which it relates. This limit is subject to certain conditions specially when the case is subject to appeals or other proceedings.
49. Can the SRB conduct on-site inspections of agricultural businesses?
The SRB has the authority to conduct on-site inspections of agricultural lands, premises or operations to verify compliance with tax regulations and assess the accuracy of the income reported.
50. How does the SRB determine the fair market value of produce of agricultural land?
SRB may determine the fair market value of produce driven from an agricultural land using a single or a combination of techniques such as land valuation tables, local market rates, price trends and technical or expert appraisals.
51. Are expenses incurred on farming machinery eligible for tax deductions?
Section 7 of the Act provides for depreciation allowance on machinery, being property of the taxpayer, which is used in earning agricultural income.
52. Can farmers apply for a refund if they overpaid agricultural income tax?
Farmers who have overpaid agricultural income tax can apply for a refund through the SRB’s prescribed refund process. The refund will be issued upon verification and approval.
53. What happens if a farmer does not register under the Act?
A farmer who fails to register as required under the Act may be subject to potential legal action including penalties, interest on unpaid taxes, assessments based on estimated income and enforced recovery by the SRB.
Further, SRB as per Section 21 “Power to make Rules”, may subject an individual/AOP/company to Compulsory Registration in accordace with the prescribed Rules.
54. Can AIT be paid in installments?
There is no concept of payment in installments in Sindh Agricultural Income Tax Act, 2025. When an owner opts to pay the outstanding tax liability belatedly or in installments, he or she may be subjected to default surcharge and penalties.
55. Does the Sindh Agricultural Income Tax Act address water usage or canal water charges for farmers?
The Sindh Agricultural Income Tax Act deals with the taxation of agricultural income. Water usage charges such as canal water fees are generally governed by separate legislations.
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