President Asif Ali Zardari and Deputy Prime Minister Ishaq Dar successfully facilitated the approval of the new agriculture income tax law by the Sindh Cabinet earlier this week.

The Sindh Assembly unanimously passed the Sindh Agricultural Income Tax Act, 2025, on Monday, which was a key condition set by the International Monetary Fund (IMF).

For four months, the federal government had struggled to convince Sindh to pass the bill, according to a report by Express Tribune.

The delay in implementing the law had hindered Pakistan’s IMF program review. The IMF had insisted that provincial governments align agricultural income tax with federal personal and corporate income tax regimes and introduce a super tax on high-income landlords.

After the finance ministry’s efforts failed, Ishaq Dar engaged with Zardari, who then called CM Murad Ali Shah and Balochistan Chief Minister Sarfaraz Bugti to expedite the legislation.

Key points of the Bill include:

• Agricultural income up to Rs. 600,000 annually will be exempt from tax.

• Income exceeding Rs. 5.6 million annually will face a maximum tax rate of 45 percent.

• A progressive super tax is introduced, with no super tax on annual agricultural income up to Rs. 150 million. The maximum super tax of 10 percent applies to income exceeding Rs. 500 million annually.

Additionally, the Bill aims to include corporate farming in the tax net:

• Small companies will be taxed at a rate of 20 percent on their annual agricultural income.

• Large companies will face a tax rate of 29 percent.

Following Sindh’s approval of the law, Finance Minister Muhammad Aurangzeb expressed confidence in securing a successful IMF review to unlock over $1 billion in the second loan tranche. The IMF is now expected to announce review dates, with the finance ministry anticipating the mission’s arrival by late February or early March.
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