Salaried class income tax contributions rise 10% to Rs315 billion in seven months of FY26

Pakistan’s salaried class saw a 10% rise in income tax contributions, reaching Rs315 billion during the first seven months of the current fiscal year. This increase, up from Rs285 billion in the same period last year, highlights the growing tax burden on this sector, according to a news report.

In the first seven months of FY26, non-corporate sector employees contributed Rs139 billion in income taxes, a 14% increase from last year, while corporate sector employees paid Rs100 billion, up by 16%. Federal government employees contributed Rs31.5 billion, marking a 9% increase, while provincial government employees paid Rs44 billion, 8% lower than the previous year.

On average, salaried individuals pay around 38% of their gross income in taxes, far above the regional average and significantly higher than other sectors like real estate and retail.

Meanwhile, skilled professionals are increasingly leaving Pakistan in search of better opportunities and lower tax rates. According to the Bureau of Immigration and Overseas Employment, approximately 254,180 highly skilled individuals left Pakistan in 2025, with 222,171 being skilled workers, 13,657 highly skilled, and 18,352 highly qualified professionals. Among them were 5,659 chartered accountants and 3,795 doctors.

Despite these departures, remittances from overseas Pakistanis continue to provide crucial financial support to the country, helping avoid a potential default as exports and foreign direct investment have dropped significantly. The government has also acknowledged the challenges but maintains that Pakistan is still seeing some skilled professionals contributing to the economy. 

The government’s recent tax reforms have included new measures for wealthy pensioners, but these have yielded only Rs30 million in the first seven months. Meanwhile, the real estate sector also faced higher taxes, with withholding tax collections on plot sales rising by 63% to Rs106 billion. However, withholding tax collections on plot purchases fell by 29% to Rs47 billion, as tax rates were reduced on purchases but raised on sales.

In total, the government collected Rs152 billion in withholding taxes from the real estate sector, up 17% compared to last year. The FBR also raised property valuations in Islamabad by up to 75%, following earlier reversals in rate hikes due to public backlash.