Govt Plans Major Tax Hikes on Fertilizers, Pesticides, and Agri-Income to Meet Rs. 14.3 Trillion Target
In a bid to boost revenue and meet its ambitious Rs. 14.3 trillion tax target for FY2025-26, the federal government is preparing to introduce significant tax hikes on the agriculture sector, including fertilizers, pesticides, and farm income.
Excise Duty on Fertilizers and Pesticides to Rise
According to sources cited by The Express Tribune, the government intends to:
- Raise Federal Excise Duty (FED) on fertilizers to 10%
- Impose a new 5–10% FED on pesticides
These measures are expected to generate Rs. 50 billion in additional tax revenue.
Agricultural Income Tax Hike to 45%
Starting July 2025, new income tax rates of up to 45% will apply to agriculture earnings retroactively from January 2025, as part of compliance with conditions under Pakistan’s latest IMF program.
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IMF Agreement Pressures Pakistan for Broader Tax Reforms
These tax proposals are part of broader reforms under the International Monetary Fund (IMF) deal, which calls for:
- Higher taxation on agricultural inputs
- Elimination of subsidies and market interventions
Despite resistance from opposition parties, the government has pledged not to roll back these tax changes.
Super Tax May Be Reduced — With a Catch
A reduction in the super tax from 10% to 8% is also under consideration. However, this relief for high-income individuals and large corporations hinges on finding alternative revenue sources to offset the shortfall.
Tax Incentives for SEZs to Be Curtailed
The government is also mulling changes to Special Economic Zones (SEZs) by:
- Reducing the tax-free period from 10 to 9 years starting July
- Halting any new or extended tax benefits for SEZs
IMF Talks Set for May 14
Formal negotiations with the IMF begin May 14 to finalize revenue measures aimed at achieving the 16% year-on-year increase in the tax target.
