As per Lawkidunya, In Pakistan, agricultural income is taxed under the Income Tax Ordinance, 2001. Here’s a step-by-step guide to calculate agricultural income tax in Pakistan:
Step 1: Determine the Agricultural Income
Calculate the total agricultural income from all sources, including:
– Sale of crops
– Sale of livestock
– Sale of dairy products
– Sale of poultry products
– Rent from agricultural land

Step 2: Calculate the Taxable Agricultural Income
Deduct the following expenses from the total agricultural income:
– Cost of seeds and fertilizers
– Cost of irrigation
– Cost of labor
– Cost of machinery and equipment
– Cost of land preparation
– Cost of pest control
– Cost of insurance
– Depreciation on agricultural assets

Step 3: Apply the Tax Rates
Apply the tax rates to the taxable agricultural income:
– 0% tax rate on agricultural income up to PKR 400,000
– 5% tax rate on agricultural income between PKR 400,001 and PKR 1,200,000
– 10% tax rate on agricultural income between PKR 1,200,001 and PKR 2,400,000
– 15% tax rate on agricultural income above PKR 2,400,000

Step 4: Calculate the Tax Liability
Calculate the tax liability by multiplying the taxable agricultural income by the applicable tax rate.

Step 5: Claim Tax Credits and Deductions
Claim tax credits and deductions, such as:
– Agricultural Development Allowance
– Crop Insurance Premium Allowance
– Zakat and Ushr deductions

Example Calculation
Suppose a farmer has a total agricultural income of PKR 1,500,000 and incurs expenses of PKR 800,000.
Taxable Agricultural Income = PKR 1,500,000 – PKR 800,000 = PKR 700,000
Tax Liability = PKR 700,000 x 5% = PKR 35,000