Pakistan’s salaried class recorded a notable 10 percent increase in income tax contributions during the first seven months of the current fiscal year, with total collections reaching Rs315 billion. This marks a rise from Rs285 billion collected in the same period last year, signaling a growing fiscal reliance on the salaried sector amid broader economic pressures, according to recent reports.
Breaking down the contributions, non-corporate sector employees paid Rs139 billion, reflecting a 14 percent increase compared to FY25, while corporate sector employees contributed Rs100 billion, up 16 percent. Federal government employees added Rs31.5 billion, marking a 9 percent increase, whereas provincial government employees paid Rs44 billion, representing an 8 percent decline from the previous year. On average, salaried individuals in Pakistan pay around 38 percent of their gross income in taxes, a rate significantly higher than the regional average and far above contributions from other sectors such as real estate or retail.
Despite these rising contributions, Pakistan continues to face a significant outflow of skilled professionals seeking better career opportunities and lower tax burdens abroad. Data from the Bureau of Immigration and Overseas Employment shows that approximately 254,180 highly skilled individuals left the country in 2025 alone. This group included 222,171 skilled workers, 13,657 highly skilled professionals, and 18,352 highly qualified specialists, among them 5,659 chartered accountants and 3,795 doctors. Analysts note that while these departures create challenges for the domestic talent pool, remittances from overseas Pakistanis remain a crucial source of foreign exchange, helping the country sustain its economy amid declining exports and foreign direct investment.
The government has also pursued targeted tax reforms to increase revenue from other sectors. Measures for wealthy pensioners yielded only Rs30 million during the first seven months of FY26. Meanwhile, the real estate sector saw a mixed response: withholding tax collections on plot sales rose sharply by 63 percent to Rs106 billion, while collections on plot purchases fell 29 percent to Rs47 billion due to rate adjustments favoring buyers. Combined, the real estate sector contributed Rs152 billion in withholding taxes, representing a 17 percent year-on-year increase.
To enhance property tax compliance, the Federal Board of Revenue (FBR) recently raised property valuations in Islamabad by up to 75 percent, reversing earlier rate reductions that had been rolled back due to public opposition. These moves are intended to widen the tax base while ensuring higher contributions from sectors capable of absorbing the increased tax burden.
Overall, the data underscores a dual challenge for Pakistan: maintaining rising revenue from the salaried class while addressing the ongoing outflow of skilled professionals. The government continues to rely heavily on both domestic salaried contributions and remittances from overseas Pakistanis to stabilize public finances and support economic recovery. The combined impact of rising tax contributions, sector-specific reforms, and international remittance inflows remains central to sustaining Pakistan’s fiscal health in FY26.
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