In a key development ahead of the IMF Executive Board meeting, the Punjab and Sindh governments have restored the old tax rates on agricultural income, officials confirmed on Thursday.The decision comes as part of a temporary relief package extended to farmers who suffered heavy losses due to devastating floods in recent years. The restored rates will remain effective from January 1 to June 30, 2025, after which new, higher rates will be re-imposed from July 2025 in line with IMF requirements.

According to officials, both provincial governments had temporarily reduced agricultural income taxes to ease the financial burden on the farming community. “Farmers were given relief due to flood losses,” an official said, adding that the tax relief is for only six months and was designed in consultation with the IMF.

This adjustment in tax policy comes at a crucial time when Pakistan is awaiting the IMF Executive Board’s approval of the next loan tranche. A staff-level agreement between Pakistan and the IMF was reached on October 15, and the board meeting is expected within the next four weeks. Once approved, Pakistan will receive the next $1.2 billion tranche, a critical inflow to stabilize the economy and maintain fiscal discipline under the IMF program.

Credit: Independent News Pakistan (INP)