Salaried Class Tops Tax Contributions in FY25

ISLAMABAD: The salaried class in Pakistan emerged as the highest contributor to direct taxes in Fiscal Year 2024-25 (FY25), paying over Rs545 billion in income tax — more than triple the amount paid by exporters and eight times that of retailers. According to the Federal Board of Revenue (FBR), this figure also marks a significant increase of Rs178 billion compared to the previous fiscal year, when the salaried class paid Rs367 billion.

In contrast, exporters contributed Rs180 billion in taxes despite earning in foreign currency, while retailers paid just Rs62 billion under Sections 236G and 236H of the Income Tax Ordinance. These provisions imposed taxes on the gross sales of distributors, wholesalers, and retailers, particularly those staying outside the formal tax net. Officials noted that despite campaigns like the Tajir Dost Scheme, the retailer segment largely avoided voluntary compliance.

The FBR has acknowledged the burden on the salaried segment and introduced tax relief measures for lower-income earners in FY26. The tax rate for those earning between Rs0.6 million to Rs1.2 million annually has been reduced from 5% to 1%, while individuals earning up to Rs2.2 million will see a rate cut from 15% to 11%. These adjustments are expected to save the salaried class around Rs50 billion in the current fiscal year.

On the issue of tax evasion, FBR officials confirmed that stricter enforcement is on the horizon. Individuals avoiding the tax net may find it increasingly difficult to conduct financial transactions like opening bank accounts, purchasing vehicles, or investing in property without proper documentation. The FBR aims to expand the tax base through pressure tactics and automation to capture undocumented income sources.