The Federal Board of Revenue (FBR) has introduced a new agriculture income tax regime. This was published in the Punjab Gazette (Extraordinary) dated March 06, 2025. This is a sweeping change from the previous regime and affects individual farmers as well as farming businesses.
In this post, we’ll explain:
- The new 2025 agricultural income tax slabs.
- A comparison with previous tax rates.
- A downloadable tax rate table for your reference.
What’s New in 2025?
The new tax regime divides agricultural income into six slabs for individual farmers and introduces corporate farming tax rates for companies involved in agriculture.
Comparison with Previous Tax Rates
Previously:
- Agricultural income was either exempt or taxed under simplified slabs with fewer thresholds.
- Many individual farmers earning below Rs. 1,200,000 faced minimal or no tax burden.
- Corporate farming was loosely regulated in terms of income tax.
Now (2025):
- A detailed slab-based tax structure is applied to individual farmers.
- Higher income brackets face progressive tax rates, up to 45%.
- Corporate farming income is taxed at 20% for small companies and 29% for all others.
New Income Tax Rates for Farmers (2025)
| Sr. No. | Income Bracket | Rate of Tax |
|---|---|---|
| 1 | Not exceeding Rs. 600,000 | Nil |
| 2 | Rs. 600,001 – Rs. 1,200,000 | 15% of the amount exceeding Rs. 600,000 |
| 3 | Rs. 1,200,001 – Rs. 1,600,000 | Rs. 90,000 + 20% of the amount exceeding Rs. 1,200,000 |
| 4 | Rs. 1,600,001 – Rs. 3,200,000 | Rs. 170,000 + 30% of the amount exceeding Rs. 1,600,000 |
| 5 | Rs. 3,200,001 – Rs. 5,600,000 | Rs. 650,000 + 40% of the amount exceeding Rs. 3,200,000 |
| 6 | Above Rs. 5,600,000 | Rs. 1,610,000 + 45% of the amount exceeding Rs. 5,600,000 |
Agricultural Income Tax for Corporate Farming (2025)
| Type of Company | Rate of Tax |
|---|---|
| Small Company | 20% |
| Any Other Company | 29% |
Who Needs to Pay?
You are required to file and pay agricultural income tax under the new 2025 regime if:
- You are an individual earning more than Rs. 600,000 per year from agricultural sources.
- You are a registered company engaged in corporate farming, regardless of profit.
Conclusion
This move by the FBR is to bring enhanced transparency and taxation progressiveness within the agricultural domain, which used to be based on soft taxes historically. It becomes necessary for farmers and industrialists to get the guidance of tax consultants and strategize the compliance under new 2025 rates.
Also read:
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- Income Tax Rates on Agricultural Income In KPK
- Balochistan Agricultural Income Tax 2025
