Salaried Class Hit Hard: Here’s How Much More Tax the Govt Took from Your Salary!

The Federal Board of Revenue (FBR) collected Rs. 605.593 billion in withholding taxes from the salaried class during 2024-25, up from Rs. 391.362 billion in 2023-24, reflecting an extraordinary increase of 54.7 percent. According to a new FBR report, the percentage share of withholding taxes in total direct tax collection remained at 59 percent in 2024-25, compared to 60 percent in 2023-24. Within the contracts category, the FBR collected Rs. 737.715 billion in 2024-25, up from Rs. 530.724 billion, marking an increase of 39 percent. Withholding tax collection from electricity bills totaled Rs. 144.371 billion in 2024-25, compared to Rs. 129.815 billion in 2023-24, reflecting an increase of 11.2 percent. Notably, withholding tax collection from salaries registered the highest increase, approximately Rs. 214.2 billion (55% growth), primarily due to a reduction in the number of income tax slabs and an increase in the corresponding tax rates for each slab. This policy shift resulted in an increase from Rs. 391.4 billion in FY 2023-24 to Rs. 605.6 billion in FY 2024-25 under withholding tax collection from salaries. This was followed by substantial increases in collections from contracts, imports, telephone, and exports. A breakdown of withholding tax collection shows that major items contributed 71.1% of the total withholding tax collection. In fiscal year 2024-25, the percentage share of withholding taxes in total income tax collection was 59%, compared to 60% in the previous financial year. The total withholding tax collection reached Rs. 3,381.5 billion, a significant increase from Rs. 2,739.1 billion in the previous year, marking growth of 23.5%. The top 15 major revenue spinners for 2024-25 remained almost the same as in the previous financial year, except for salaries, which now account for the second highest share in the current year. Fourteen out of the 15 major components of withholding tax collection registered positive growth, except for bank interest and securities, which dropped by 1.6%, the report added.