Pakistan’s salaried taxpayers have contributed significantly more to the national exchequer at the start of the current fiscal year, with income tax collections from this segment rising to Rs85 billion during July and August of FY2025-26. This marks a 21% jump compared to Rs70 billion collected in the same period of the previous fiscal year, according to provisional figures from the Federal Board of Revenue (FBR).
The increase highlights the growing burden on salaried individuals, who continue to account for a rising share of total tax revenues. Non-corporate employees emerged as the largest contributors during this period, paying Rs41.5 billion, which reflects a 26% increase over last year. Corporate sector employees also contributed strongly, paying Rs20 billion, up by the same margin.
Employees working under provincial governments paid Rs10.5 billion in the first two months, showing a modest 6% rise, while federal government employees contributed Rs7.6 billion, registering an 8% year-on-year increase. The data underscores how structured salaried taxpayers, who are easily traceable through payroll systems, remain a dependable source of tax collection.
However, one of the government’s newly introduced measures—an income tax on wealthy pensioners earning more than Rs10 million annually—yielded relatively limited results. The levy brought in only Rs180 million in the two-month period, indicating that collections may reach just over Rs1 billion by year-end, far below expectations.
The surge in salaried class contributions follows a challenging fiscal environment where tax relief for employees remains limited. Finance Minister Muhammad Aurangzeb has acknowledged that fiscal space constraints leave little room for easing the tax burden on wage earners. The latest rise in collections builds on last year’s sharp jump, when contributions from salaried individuals grew more than 50% due to revised income tax brackets.
While salaried taxpayers continue to meet their obligations, enforcement in other areas of the economy remains weaker. Despite several measures designed to bring traders into the tax net, such as restrictions on economic transactions for ineligible persons, many steps have been diluted or rolled back, limiting effectiveness.
The real estate sector has also come under closer scrutiny in FY26. Higher taxes were imposed on non-filers, along with the introduction of a new late-filer category. Withholding tax on the sale of plots rose sharply by 92%, reaching Rs28 billion in two months, signaling stricter enforcement in the property market. However, collections from plot purchases dropped by 12%, falling to less than Rs13 billion, reflecting reduced activity or compliance challenges.
These trends illustrate how Pakistan’s tax system continues to lean heavily on formal sector workers while facing difficulties in widening the base among traders and other segments of the economy. For policymakers, balancing revenue needs with fairness in the tax structure remains an ongoing challenge.
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