Tax Exemption in Agriculture Sector Being Revoked: Fears of Disrupted Food Production and Rising Inflation

Increased Tax Burden on Poultry and Fisheries Sectors, Real Farmers in Distress | Warning Signs in Agriculture Sector

Staff Correspondent | May 16, 2025

A concerning signal has emerged in the country’s food production system as the government plans to withdraw existing income tax exemptions for agriculture-based sectors, particularly fisheries and poultry, in the upcoming budget. While the National Board of Revenue (NBR) is taking this step to increase government revenue, experts have expressed concerns over its potential impact.

According to NBR data, income from these sectors currently incurs taxes ranging from 3% to a maximum of 15%. However, after the NBR’s new measures in the upcoming budget, income from these sectors may be subject to regular tax rates, reaching up to 30%.

The list may also include income from duck and chicken hatcheries as well as shrimp hatcheries.

Additionally, the following sectors may be included—pelleted feed production for poultry, livestock, shrimp, and fish; seed production and marketing; cattle farms; dairy and dairy product farms; frog farming; horticulture; mulberry cultivation; beekeeping projects; silkworm farming; mushroom farming; and floriculture income.

Experts say that tax exemptions in agriculture-based sectors have been in place for a long time to encourage agricultural investment and ensure food security. However, revoking these exemptions will increase farmers’ costs, directly impacting food prices in the market. Consequently, financial pressure on ordinary consumers may also rise.

While genuine farmers will suffer, the government will benefit from increased revenue collection. NBR sources say that if the proposed tax rates are implemented, an additional revenue of around Tk 3,000 crore could be collected. However, if enforced, food production costs may also rise alarmingly.

Currently, income from these sectors is taxed at 5% for the first Tk 10 lakh, 10% for the next Tk 10 lakh, and 15% for the remaining income. In contrast, individual taxpayers currently face a maximum tax rate of 30%, while most companies pay at a 27.5% rate.

However, according to the NBR and related sources, this tax benefit has been misused for a long time. Many influential politicians, bureaucrats, and businessmen have laundered large amounts of black money under the guise of income from fisheries or agriculture.

Dr. Syed Md. Aminul Karim, a former NBR member, believes that a review of the tax exemption policy is necessary to stop this misuse. He said, “Many have legalized black money through lower tax rates, which could be prevented if normal tax rates were applied.”

Tax expert Snehasish Barua thinks that a reasonable policy protecting marginal farmers is essential in tax exemptions. However, he warns that increasing food production costs will ultimately burden consumers, potentially creating a new crisis for people already struggling with inflationary pressures.

Now, the question is—how will the government protect real farmers while restructuring this tax policy, balancing increased revenue collection with maintaining food security?

Overall, the withdrawal of tax exemptions from agriculture-based sectors is no longer just a revenue policy but has become a crucial political and economic decision that will determine food production, price control, and the future direction of the agriculture sector.