ISLAMABAD: Despite bearing a record tax burden, Pakistan’s salaried class paid a staggering Rs555 billion in income tax during the fiscal year 2024-25, yet the Federal Board of Revenue (FBR) still missed its annual tax collection target by around Rs1.2 trillion.
According to provisional FBR data, salaried individuals contributed 51% or Rs188 billion more in taxes compared to the previous year’s Rs367 billion. The increase reflects the government's aggressive taxation policy on fixed-income earners, while more influential sectors like retailers and real estate continue to evade fair taxation.
The Rs555 billion paid by salaried individuals was over 100% higher than the combined Rs63 billion collected from the retail and wholesale sectors, much of which remains undocumented. Retailers, mostly unregistered, paid just Rs38 billion in withholding tax, while wholesalers and distributors contributed only Rs25 billion.
Employees from the non-corporate sector paid Rs236.5 billion, up 40%, while corporate employees paid Rs165 billion, a 49% increase. Provincial government employees paid Rs99.5 billion, nearly doubling their contribution, and federal government employees contributed Rs54.2 billion, up 45%.
The government had earlier claimed a Rs75 billion revenue boost from increased salaried taxation, but the actual gain was far higher. Despite this, only a marginal relief was offered last month to those earning up to Rs3.2 million annually—estimated at Rs56 billion—a sum critics say is negligible in light of the heavy tax burden.
Meanwhile, the government’s Tajir Dost scheme to document the retail sector failed, and new budgetary measures have done little to enforce compliance. Furthermore, recent exemptions in the financial documentation law now allow undeclared individuals to make high-value purchases, weakening enforcement.
Out of Pakistan’s Rs5.8 trillion income tax collection in FY25, one out of every ten rupees came from the salaried class—citizens with little ability to hide income or claim expenses. Analysts argue the imbalance highlights a systemic failure to broaden the tax base and ensure equity.
