Pakistan’s salaried class has paid a record-breaking Rs391 billion in income tax during the first nine months of the current fiscal year—10% of the nation’s total income tax collection—highlighting the growing tax burden on a segment that lacks political clout and bargaining power.
According to provisional figures from the Federal Board of Revenue (FBR), this amount is Rs23 billion more than what salaried individuals paid in the entire previous fiscal year. Meanwhile, retailers and traders, many of whom remain outside the formal tax net, contributed a mere Rs26 billion—just 60 paisa for every Rs10 paid by salaried workers.
The government had initially aimed to collect Rs75 billion in new income tax from salaried employees for the full fiscal year 2024-25. However, the figure has already surged past Rs140 billion, with three months still remaining. This represents a 56% increase from last year, despite no new tax relief or deductions for everyday living costs, unlike the privileges enjoyed by other sectors.
The steepest burden falls on middle and upper-middle-income groups, after the government last year reduced tax slabs and introduced higher rates. Individuals earning over Rs443,000 a month now face a combined tax rate of 38.5%, including a 10% surcharge.
The FBR’s breakdown shows:
- Non-corporate employees paid Rs166 billion (+43%)
- Corporate sector employees paid Rs117 billion (+52%)
- Provincial government employees paid Rs69 billion (+103%)
- Federal government employees paid Rs39 billion (+65%)
By contrast, traders—who were expected to formalize under new tax rules—largely passed on their tax costs to consumers without increasing their tax compliance. The Rs13.3 billion collected from traders under increased withholding tax is far from the government’s goals, as Section 236-H collections from this group remain 1,420% lower than what salaried individuals pay.
Despite this imbalance, the government did not raise the issue of relief for salaried workers during recent discussions with the International Monetary Fund (IMF). An IMF team is expected to arrive in Pakistan on May 14 to begin reviewing the budget for the next fiscal year.
Insiders say the high revenue collected from salaried individuals could make the government reluctant to cut taxes for this group in the next budget, fearing a major dip in revenue. The FBR has already missed its tax collection targets by Rs714 billion over the past nine months, with revised projections now suggesting total revenue may fall short of even the reduced Rs12.3 trillion target set by the IMF.
FBR spokesperson Dr. Najeeb Memon said the government is considering ways to ease the burden on salaried taxpayers without compromising the progressive structure of the tax system.
