SRB Tax Forum

8th April, 2015

AGRICULTURE TAX REFORMS

by

Zulfiqar Ali Shah

Member (Reforms Wing)

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BOARD OF REVENUE, SINDH

Introduction to BOR

Board of Revenue is the main custodian of the land records in the province

It employs about 5000+ employees

It is the third largest contributor to the provincial revenues

Collects revenue on Agricultural land, Stamps, Registration, CVT etc.

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Agro-Based tax/levies consist of various revenues of Govt. of Sindh

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*Assessment & Collection is authorized under Chapter VII of Sindh Land Revenue Act 1967

**Section 4 (1) of the Sindh Land Tax and Agricultural Income Tax Rules 2001 defines the mode of collection of land tax

Department Tax Description & Levied under

Board of Revenue Sindh Agricultural Income Tax, Land Tax and Mutation Fee • Land & Agricultural Income Tax Ordinance 2000

Irrigation Department Water Rate & Drainage Cess Irrigation Act 1989

Local Govt. Department Local cess Levied under Local Govt. Act 2013

Assessed & collected by BOR through a team of Tapedars, Mukhtiarkars & Assistant Commissioners*

Collected in cash, Cheque, Demand draft, Pay order or through Treasury Challan**

Kinds, Description & Rates of Agro-Based tax

4

S.

No

Tax Description Rate Per Year

01 Land Tax Levied under:

Agricultural Land & Income Tax

Ordinance 2000

Assessment & Collection under:

Sindh Land Revenue Act 1967

• Rs.200/- per acre of cultivated land above 16

acre

• Rs.100/- per acre of unirrigated land above 32

acre

• Rs. 500 per acre on Matured Orchard Banana

& Betal Leaf if irrigated and Rs.250 per acre if

unirrigated

02 Local Cess Revenue of Local Govt. Deptt.

Assessment & Collection under:

Sindh Land Revenue Act 1967

• Rs.10/- per acre per season on perennial (12

month flowing canal)

• Rs.5/- per acre per season on non-perennial

(6 month flowing canal)

• Rs.2/- per acre per season on land cultivated

via rain (barani land)

03 Agriculture Income Tax Rates Fixed under

Agricultural Land & Income Tax

Ordinance 2000

Assessment & Collection under:

Sindh Land Revenue Act 1967

• 5% of the total income, if it’s within

Rs.100,000/-

• Rs. 5,000/- plus 7½% of the amount exceeding

Rs.100,000/- but within 200,000/-

• Rs.12,500/- plus 10% of the amount exceeding

Rs.200,000/- but within 300,000/-

• Rs.22,500/- plus 15% of the amount exceeding

Rs.300,000/-

Schedule of Existing Rates of Agro-based tax S.

No

Tax Rate* Per Year

04 Water Rate Water service charges

Tax levied under:

Irrigation Act’ 1989

Assessed & collected under:

Sindh Land Revenue Act

1967

• The service charge of water supply for irrigation

purpose is called Water rate.

• The rates of water tax varying from crop to crop &

from canal to canal are fixed by Irrigation

Department; see next slide

• Of 5979 Dehs, assessment & recovery of water

rate for 2173 Dehs fall under Irrigation Drainage

Authority (SIDA), while the remaining Dehs are

dealt with by Revenue Department.

05 Drainage Cess Drainage facility tax

Tax levied under:

Irrigation Act’ 1989

• Rs.100/- per acre of land where drainage facility is

available

06 Misc. Land Revenue Various types of Mutation Fee of BOR

Levied, Assessed & Collected under SLRA

1967

• Mutation Fee Rs.10/- per entry

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Water rate & Drainage Cess are agro taxes of Irrigation Deptt., fixed under Irrigation Act 1989 while

assessed & collected by Board of Revenue under Sindh Land Revenue Act 1967

Summary of Agro-Based Revenues & Agricultural Income Tax

DURING PAST 5 YEARS (2009 TO 2014)

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Figures in Millions

• The Agro-Based Tax receipts represent Land Tax, Local Cess, Drainage Cess, Water Rate & Misc. Revenue only.

• **2014-15 show Kharif Season revenues only while receipts for Rabi season to come after June 2015.

Year Agro-Based Tax* Agricultural

Income Tax Total

2009-10 554 4 558

2010-11 469 4 474

2011-12 296 5 301

2012-13 442 7 449

2013-14** 505 102 606

POST COMPUTERIZATION

SCENARIO

NEW STATISTICS

FRESH PERSPECTIVE

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AREA UNDER OWNERSHIP (IN ACRES)

Total: 12,539,641 Acres.

8

863968

615514

136881

183245

207818

87561

952

388001

2446

191321

1427462

6384

15916

18

3855

41451

732416

1034056

948880

513732

390801

1732117

266418

615208

435244

329045

312276

573448

483207

0 200000 400000 600000 800000 1000000 1200000 1400000 1600000 1800000 2000000

Dadu

Ghotki

Matiari

Naushero Feroz

Shaheed Benazirabad

Shikarpur

Jamshoro

Mirpurkhas

Tando Allahyar

Umerkot

Badin

Karachi

Karachi East

Karachi West

Malir

Malir Karachi

Tharparkar

Jacob Abad

Larkana

Kashmo and Kandh kot

Khamber Shahdad kot

Sukkur

Jamshoro

Tando Allahyar

Hyder Abad

Khairpur

Tando Muhammad Khan

Sanghar

Thatta

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AREA WISE OWNERSHIP ANALYSIS

Area Owners Under 4 Acre 3,526,545

Above 4 and

equal to or less

than 16 acres 267,178

Above 16 acres 105,841

Total 3,899,564

3,526,545

90%

267,178

7% 105,841

3% Under 4 Acre

Above 4  and equal to or less than 16 acres

Above 16 acres

CONSOLIDATED SCHEDULE OF RATES OF AGRO-BASED TAX Per acre per year

Land Tax Water Rate Local Cess Drainage Cess Total

200* 63* 12* 100 369

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* Rates vary from crop to crop and canal to canal for water tax thus average rate is assumed; Rates also

vary for mutation fee from nature of transaction but average rate is assumed;

PILFERAGE IN AGRO-BASED TAX

Current Average Rate of Agro-Based

Tax

Total Owned Land in Sindh

(Million Acres)

Total Agro-Land Taxable

(Million Acres)

Anticipated Revenues (M)

Actual Revenues (M)

Pilferage in Revenues (M)

369 12.5 10.0 3690 606 3084

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PROSPECTIVE GROWTH IN AGRO-BASED TAX THROUGH FLAT RATE REFORM STRATEGY

Flat Rate for

Agro-Based

Tax

Agricultural Land

under ownership

Anticipated

Tax Amount

Average

Actual

Recovery

Anticipated

Growth

Rupees in Million per year

Flat Tax

Rate

Owned

Agricultural

Land

Anticipated

Revenue

Current

Revenue

Anticipated

increase

100 10.0 1000 600 400

200 10.0 2000 600 1400

300 10.0 3000 600 2400

400 10.0 4000 600 3400

500 10.0 5000 600 4400

Assessment through computerized record

From the computerized database, area of agricultural land under ownership and name of owner with identity can easily lead to assessment of anticipated agro-based tax

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Conclusion

Proposal to be fine tuned at Deh, Taluka and District Level to determine the rates

o Produce Index Unit rate (Deh-wise)

o Technology based assessment of historical data GIS / remote sensing based assessment to assess

Cultivation trends

Quality and type of crops

o Riverine Land

o Barani Land

o Any other context of assessment

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Conclusion

Introduction of Single Provincial Tax

Concept of Rabi / Kharif Assessment to be shelved

Minimize Human intervention

Introduction of technology & modern best practices

Direct Deposit in Banks

Lower taxes

Immediate potential of higher revenues (400 – 4400 m)

Hence the need of a detailed study with concrete conclusions & proposals

Involve all stake holders to cultivate decision making

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