KARACHI: A draft law to bring reforms in existing agriculture income tax collection and related laws has suggested seven tax slabs for the assessment of farm income between Rs400,000 and Rs6 million or above as well as a fixed tax on holding minimum 16 acres of cultivated land, it emerged on Tuesday.

The draft Sindh Agricul­tural Income Tax Bill, 2014 — likely to be tabled in the Sindh Assembly in its upcom­ing session — was prepared by a committee head­ed by its convener Abdul Majeed Nizamani, the president of the Sindh Abad­gar Board, with representatives of the Sindh cham­ber of agriculture and other tax and agriculture economy experts as its members.

The provincial government tasked the committee to deliberate on the issue and recommend reforms needed in the existing system and laws governing the levying of agricultural income tax on farmers and propose a draft of reforms.

In the first schedule of the draft bill, the tax tariff suggested Rs200 per acre per annum on irrigated land and Rs100 per acre on unirrigated land, while on matured orchard banana and betel leaf Rs700 per acre on irrigated land and Rs350 per acre on unirrigated land.

The minimum income tax should be applicable to cultivated land of more than 16 acres. This exemption shall not apply to matured orch­ard, banana and betel leaf. No minimum income tax shall be levied in Thar desert and Kohistan areas and if the owner of the land pays Usher as per the Zakat and Ushr Ordinance, 1980 that shall be the total tax payable under this schedule.

In the second schedule there are seven categories which reads: where the net taxable income does not exceed Rs 400,000, tax zero per cent; where the net taxable income exceeds Rs 400,000, but does not exceed Rs750,000, 5pc of the income above Rs400,000; where the net taxable income exceed Rs750,000 but does not exceed Rs1.5 million, Rs17,500 plus 10pc of the income above Rs750,000; where the net taxable income exceeds Rs1.5m but does not exceeds Rs2.5m, Rs 92,500 plus 15pc of the income above Rs1.5m; where the net taxable income exceeds Rs2.5m but does not exceed Rs4m, Rs242,500 plus 20pc of the income above Rs2.5m; where the net taxable income exceeds Rs4m but does not exceed Rs6m, Rs542,500 plus 25pc of the income above Rs4m; where the net taxable income exceeds Rs6m, Rs1.042m plus 30pc of the income above Rs6m.

Paltry tax revenue from farm income

According to the draft bill, no civil court shall have jurisdiction in any manner relating to the assessment or collection of the agri-income tax or minimum income tax and no order passed or proceedings taken by an authority under this act shall be called in question in any civil court.

However, for the purpose of appeal, review or revision, an order passed under this act shall deem to be an order of a revenue officer within the meaning of the Sindh Land Revenue Act, 1967.

Every person... has during the said income year, cultivated land measuring 50 acres or more of irrigated land or 100 acres or more of non-irrigated land or irrigated and non-irrigated land the aggregate area of which is equal to or more than 50 acres of irrigated land shall file a return of his total agricultural income or the agricultural income of such other persons, as the case may be, for the said income year in such form and by such date as may be prescribed. However, no assessment on the basis of the return shall be made by the collector after the expiration of two years from the end of the assessment years in which the total agricultural income was first assessable.

Adjustment of taxes: in case a person whose only income is from agriculture, the withholding tax/advance tax on motor vehicles, advance tax on private motor vehicles, cash withdrawal from bank, electricity consumption and telephone users, advance tax on purchase of air ticket, advance tax on sale or transfer of immovable property, advance tax on functions and gatherings and collection of advance tax by educational institutions shall be termed as tax collected in advance from the agricultural income of the person and shall be adjusted accordingly.

Losses: where a person sustains a loss for any tax year, the person shall be entitled to have the amount of the loss set off against the person’s income, if any, chargeable to tax for the ensuing year.

Penalty clauses: wherein the course of any proceedings under this act, the collector or the appellate or revision authority is satisfied that any owner has either in the said proceedings or in an earlier proceedings relating to an assessment in respect of any agriculture income tax year, concealed the particulars of cultivated land or furnished inaccurate particulars of such cultivated land, he or it may impose upon such owner a penalty equal to the amount of minimum income tax which the said owner sought to evade by concealment of his cultivated land or furnishing of inaccurate particulars of such cultivated land as aforesaid.

Similarly if the authority is satisfied that any person has either in the said proceedings or in any earlier proceedings relating to an assessment in respect of agriculture income year concealed his agricultural income or furnished inaccurate particulars of such income he or it may impose upon such person a penalty equal to the amount of tax which the said person sought to evade by concealment of his agricultural income or furnished of inaccurate particulars of such income as aforesaid.

No penalty shall be imposed on any person by a collector or the appellate or revision authority unless such person has been given a reasonable opportunity of being heard. The government may exempt any land or class of owner wholly or partially from payment of minimum income tax in a manner and to the extent as prescribed by the rules.

Published in Dawn, July 23rd , 2014