Karachi, September 7, 2024 – The Federal Board of Revenue (FBR) has announced the continuation of tax exemption on agricultural income for the tax year 2024-25.
This continuation of tax exemption comes as part of the Income Tax Ordinance, 2001 updated until June 30, 2024.
The FBR’s announcement ensures that agricultural income will continue to benefit from tax exemptions under Section 41 of the Ordinance. This section provides a detailed definition of what constitutes agricultural income and outlines the conditions under which it remains exempt from taxation.
According to Section 41 of the Income Tax Ordinance issued by the FBR, agricultural income is defined as follows:
1. Exemption from Tax: Agricultural income derived by a person shall be exempt from tax under this Ordinance.
2. Definition of Agricultural Income:
(a) Any rent or revenue derived from land situated in Pakistan and used for agricultural purposes.
(b) Income derived from land situated in Pakistan from:
(i) Agriculture.
(ii) The performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed to render the produce fit for market.
(iii) The sale by a cultivator or receiver of rent-in-kind of the produce raised or received, with no process performed other than those described in sub-clause (ii).
(c) Income from:
(i) Any building owned and occupied by the receiver of rent or revenue from the land described in clause (a) or (b).
(ii) Any building occupied by the cultivator or the receiver of rent-in-kind of any land, where the building is on or near the land and is required as a dwelling-house, storehouse, or other out-building related to the agricultural activities.
The FBR’s decision to maintain the tax exemption underscores the government’s ongoing support for the agricultural sector. By exempting agricultural income from tax, the policy aims to encourage agricultural production and support farmers by reducing their financial burden.
The extension of this exemption by the FBR is anticipated to have positive effects on the agriculture sector, particularly benefiting small-scale farmers and cultivators who rely on agricultural income as their primary source of livelihood. The tax exemption is expected to provide financial relief and support the growth and sustainability of agriculture in Pakistan.
As the tax year progresses, stakeholders in the agricultural sector are encouraged to stay informed about any further updates or changes in tax policies that may impact their operations. The FBR’s decision marks a continuation of the supportive measures aimed at fostering a robust agricultural economy.
