Salaried Class is Paying One-Third of All Personal Income Tax to FBR

Despite the downward revision of salary slabs through the Finance Act 2025, the Federal Board of Revenue (FBR) collected Rs. 138 billion from the salaried class during the first quarter of 2025-26, compared to Rs. 110 billion in the first three months of 2024-25. The FBR generated around Rs. 20 billion more during July-September 2025-26 than in the same period of the previous fiscal year. Meanwhile, FBR data revealed that the total personal income tax collected from the salaried class totaled Rs. 1,936 billion, with salaried taxpayers contributing 29% of the total collection. According to FBR data, the salaried class accounted for only 10% of PIT collection in 2018-19. Over the past six years, this share has gradually increased each fiscal year: 10% in 2018-19, 12% in 2019-20, 12% in 2020-21, 19% in 2021-22, 25% in 2022-23, and 29% in 2024-25. During the same period, FBR’s total revenue nearly tripled from Rs. 3,829 billion in FY2018-19 to Rs. 11,744 billion in FY2024-25. However, the salaried class’s share of total FBR revenue has remained modest, at just 5% in 2024-25, indicating that individual taxpayers are paying more, but the broader tax net remains narrow. The data also shows that personal income taxes (including both salaried and non-salaried individuals) now represent 16% of total FBR revenue, down from 19% in FY2018-19. When contacted, a tax expert told ProPakistani that while the FBR highlighted the growth in tax collection from 8.83% to 10.33%, it failed to mention the real story behind it, this “growth” was achieved by overburdening existing taxpayers, especially the salaried class. In Tax Year 2022, the salaried class contributed Rs. 189 billion in taxes. Last year, this jumped to over Rs. 560 billion, and this year, it is set to reach nearly Rs. 700 billion. But this isn’t a success story, it’s a story of unfair targeting, he added. The upper income slab taxed at 35% was drastically reduced from Rs. 75 million to just Rs. 4.1 million, an unheard-of reduction (when other countries revised these slabs upwards due to inflation), not only in Pakistan but globally. By taxing incomes above Rs. 4.1 million (around USD 14,500) at 35%, we are punishing our most skilled professionals. Our brightest minds are leaving the country because of this crushing and unsustainable taxation, which has destroyed their purchasing power, with nearly half their income lost to direct and indirect taxes, the tax expert said. Believe me, with this approach, we cannot survive in the long run. This policy is not reform, it’s economic self-destruction. The increase in tax collection isn’t your team’s achievement; it’s the result of the salaried class’s silent sacrifice. They are the real heroes, carrying an unjust burden that threatens the very future of our nation, the tax expert added.