Summary Pakistan’s salaried class paid Rs365 billion in income tax during July–February FY26, outpacing other sectors, as limited tax base expansion restricts relief prospects.
ISLAMABAD (Dunya News) - Pakistan’s salaried class remained the largest contributor to income tax, paying Rs365 billion during the first eight months (July-February) of the current fiscal year, according to official data.
Figures released by the Federal Board of Revenue (FBR) show that salaried individuals contributed Rs365 billion in July–February FY26, up from Rs332 billion during the same period last year.
Despite only modest relief in the lower tax slabs, collections from salaried employees continued to rise, reflecting the growing burden on documented segments of the economy.
In contrast, no major policy initiative has yet been finalised to bring retailers into the tax net in the upcoming 2026-27 budget. Recent discussions with the International Monetary Fund (IMF) included proposals on retail sector taxation, but no concrete decisions have been reached.
Experts warn that without broadening the tax base, relief for salaried individuals remains unlikely. The salaried class is currently paying three to four times more in taxes than exporters, retailers, wholesalers and distributors combined.
This trend is not temporary. Over the past five years (2019–2024), tax contributions from salaried individuals surged by more than 400%, significantly widening the gap with other sectors.
A study by Sajid Amin Javed highlights that between 2020 and 2025, salaried individuals paid Rs1,144.94 billion in taxes, compared to just Rs16.54 billion from retailers and Rs35.23 billion from wholesalers and distributors.
Data from the State Bank of Pakistan (SBP) shows that out of around five million micro, small and medium enterprises, only 179,383 retailers have installed point-of-sale (POS) systems, underscoring weak documentation in the sector.
Analysts note that politically influential sectors such as retail, wholesale, agriculture and real estate have historically resisted formalisation, while successive governments have struggled to enforce compliance. As a result, the tax burden continues to fall disproportionately on salaried individuals and other formal sectors.
Although the government has recently brought high-income pensioners earning over Rs10 million annually into the tax net, their contribution has remained minimal during the current fiscal year.
