This document discusses mechanization in agriculture and agricultural income taxation in Pakistan. It provides background on the history of mechanization in agriculture and examines arguments for and against taxing agricultural income. Specifically, it notes that mechanization involves replacing manual labor with machinery to increase crop yields. It also outlines the debate over taxing agricultural income in Pakistan dating back to the 1860s, noting various committees and policies that have both supported and opposed taxation of agricultural incomes.

1. Aasma Aslam
M.Phil
University of Lahore
Pakpattan Campus

2. Mechanization
Mechanization or mechanisation is the
process of changing from working largely
or exclusively by hand or with animals to
doing that work with machinery.

3. Comparison

4. Mechanization of agriculture to increase crop yield
Chemical Technology
fertilizer Plant protection measure
Hybrid seeds

5. Mechanization of agriculture to increase crop yield
Hydrological Technology
Drip Irrigation system
Embankment of water channelsTube wells

6. Mechanization of agriculture to increase crop yield
Mechanical Technology

7. • During fiscal year 2013-14, the overall performance of agriculture sector
witnessed a growth of 2.1 percent due to positive growth in agriculture related
sub sectors. Crops grew at 1.2 percent, Livestock 2.9 percent, Forestry 1.5
percent and Fishing 1.0 percent.
Table : Agriculture growth percentages (Base=2005-06)
Sector 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Agriculture 1.8 3.5 0.2 2.0 3.6 2.9 2.1
• Crops -1.0 5.2 -4.2 1.0 3.2 2.3 1.2
• i) Important Crops -4.1 8.4 -3.7 1.5 7.9 1.2 3.7
• ii) Other Crops 6.0 0.5 -7.2 2.3 -7.5 6.1 -3.5
• iii) Cotton Ginning -7.0 1.3 7.3 -8.5 13.8 -2.9 -1.3
• Livestock 3.6 2.2 3.8 3.4 4.0 3.5 2.9
• Forestry 8.9 2.6 -0.1 4.8 1.8 1.0 1.5
• Fishing 8.5 2.6 1.4 -15.2 3.8 0.7 1.0
• Source: Pakistan Bureau of Statistics

8. PRODUCTION INDEX OF IMPORTANT
CROPS 2005-06 BASE
Crops 2011-12 2012-13 2013-14
Wheat 110.3 113.8 118.8
Maize 139.5 135.7 145.6
Rice 111.1 99.8 122.5
Sugarcane 130.7 142.7 148.8
Cotton 104.4 100.1 98.1
Source: Pakistan Bureau of Statistics(fiscal year 2013-14)

9. Should there be mechanization in
agriculture?
Against
• Capital Intensive
• Technology for big farmer bias
• Displace labour
• Divert Capital & foreign exchange

10. Should there be mechanization in
agriculture?
Favour
• Encourage multiple cropping
• Package of modern inputs
• Lowers the Cost of production
• Reduce the dependency upon animal

11. Agriculture Income Tax
AGRICULTURAL INCOME TAX in PAKISTAN —
A BRIEF SURVEY
• In 1860 the British Imperialists levied income
tax in India. Agricultural Income was also
taxable.
• In 1882 Agricultural Income was exempted
from taxation.
• In 1922 Income Tax Act was promulgated and
Agricultural Income was exempted from
taxation.

12. • In 1925 Indian Taxation Enquiry Committee
(TEC) was constituted, which recommended
taxation of all incomes including the
agricultural incomes.
• In 1935, the taxation system was divided been
the central and provincial governments.
Agricultural tax was removed from the
purview of the central government.

13. • In 1944, a law for the imposition of
Agricultural Income Tax was promulgated in
the Province of Bengal.
• In 1948 in Pakistan, the Provinces of Punjab-
Bhawalpur and N.W.F.P. promulgated similar
laws.
• In 1956, with the promulgation of the
constitution, the agricultural tax was removed
from the purview of the central government.

14. • IN 1959, Taxation Enquiry Committee
recommended taxation of agricultural income but
the Food and Agricultural Committee
recommended exemption of Agriculture from
taxation.
• In 1963, Fact Finding Committee on Agriculture
opposed imposition of tax on agriculture.
• In 1964, Taxation and Tariff Commission
recommended the imposition of tax on
agriculture and handing over the subject to the
Federal Government, but the Government of
West Pakistan vetoed the proposal.

15. • In 1970, the Enquiry Committee on
Agriculture recommended the imposition of
income tax on agricultural income on a very
limited scale, but it was not accepted.
• In the 1973 Constitution, agricultural income
was again exempted from taxation.
• In 1977, the Federal Government repealed the
I.T. Act of 1922.

16. • In 1977 the Assembly passed the Financial
Ordinance, which exempted 25 Acres irrigated
and 50 Acres non irrigated land from taxation.
Due to the imposition of Martial Law, it could
not be Implemented.
• In 1979, Agricultural Income was exempted
from taxation by the I.T. Ordinance.
• In 1986, the National Taxation Reform
Commission examined the imposition of
Agricultural Income tax but there was no
outcome.

17. • In 1992 there was a serious deficit in tax
revenue. Serious consideration started to be
given to the imposition of agricultural income
tax.
• In 1993 The Care-taker Prime Minister Moin
Qureshi rescinded the Section 5-a of the
Wealth Tax Act (1963) so that agricultural
income may be taxed on a limited scale.

18. • From the above it is clear that during the last
Century and Half the question of Agricultural
income tax has been a subject of debate, but
without any result. The taxation policy
throughout the world is on income- period

19. The Issue of agricultural taxation
Should agriculture be taxed?
There are number of arguments presented for
and against a tax on agriculture.

20. Arguments Against Income Tax on
Agriculture
• Difficult assess to net income
• Inaccessible approach to farmers
• Uncertain agriculture income

21. Arguments in favor of Income Tax on
Agriculture
• Agricultural income
• Evasion on income tax
• More Elastic Income