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Land's rental value likely to form basis for agri tax

RECORDER REPORT

ISLAMABAD: The Ministry of Finance on Tuesday further fine-tuned implementation strategy of agriculture tax in a meeting presided over by Secretary General Finance Moeen Afzal.

Annual rental value of agriculture land is likely to form the basis for imposing tax on agriculture income, it was observed. The policy will be announced within the next few days, sources told Business Recorder.

The Ministry of Finance in this regard has completed homework, and legal framework will be laid down soon, sources said. The provinces, which have not introduced farm tax as yet, will comply with the decision through an ordinance. The law division has already prepared a draft ordinance for Sindh province.

The decision would be presented before the cabinet for its final approval after it is further fine-tuned by the Finance Minister. The meeting discussed and approved the proposals of the expert's advisory board on agriculture tax. Provincial input was available, where the decision will actually be implemented.

According to the sources there were three basic ideas among them the annual rental value has a loud support. Agriculture land in Pakistan is valued for its production capacity, which is translated in rental value. The income could therefore be judged by its annual rental value. Sources said, adopting rental value as tax basis would also encourage farmers to bring maximum area under cultivation.

The other two proposals were taking produce-units as the basis for tax and taking net income as taxable income. Since the produce units were defined long ago, a fresh fieldwork was required to accept them as standard. The concept of net income as basis for tax evaluation was discussed at length.

Sources said all four provinces had already done the spadework. They said Punjab is ahead of all. The legal framework in the province is in place and revenue department is collecting farm tax for the second year in succession.

Balochistan is at the bottom. Sources said since government is looking forward to improving agri-production in Balochistan, the province has been asked to complete the work for an early compliance.

Expert's advisory board, chaired by Dr Tarique Siddiqui will present final proposals in this regard very soon, sources concluded.