Karachi, January 24, 2025 – The Federal Board of Revenue (FBR) has announced a significant tax exemption worth Rs 57.52 billion for agriculture income in the tax year 2023, according to an official report released by the Board.
This move has provided a major relief to various government organizations that benefit from this exemption.
The FBR clarified that the tax exemption applies to agriculture income, which is a subject under provincial jurisdiction. In line with the provisions of the Income Tax Ordinance, 2001, income earned by the federal government is automatically exempt from taxation. As such, the FBR has ensured that no tax is levied on agriculture income earned by the federal government for the year 2023.
In addition to this, the FBR also confirmed that the income of provincial and local governments is exempt from taxation, with one notable exception. The exemption does not apply to income derived under the head ‘Income from Business’ if such income is generated from business activities carried out outside the jurisdictional boundaries of the respective provincial or local government.
The FBR has consistently supported the idea that agriculture, being primarily a provincial matter, should be managed under the purview of provincial governments. By granting this tax exemption, the FBR has reinforced the idea that agricultural income, as outlined by the law, should remain outside the scope of federal taxation unless otherwise specified.
The exemption is expected to have a significant impact on the financial position of various government bodies involved in the agricultural sector. This move aligns with broader government efforts to promote agricultural development and provide support to public sector organizations that play a vital role in the country’s agricultural output.
By exempting Rs 57.52 billion in taxes on agriculture income, the FBR is not only adhering to legal requirements but also ensuring that government organizations, especially those involved in the agricultural sector, can continue their operations without the burden of additional tax liabilities.
The FBR’s decision underscores the importance of maintaining clear tax guidelines for both the federal and provincial governments. This step is expected to benefit various agricultural initiatives and contribute to the overall economic development of the sector, promoting greater growth and stability within the industry.