Pakistan’s salaried class pays Rs365 billion tax in 8MFY26, exceeds retailers, exporters and property sectors combined

Pakistan’s salaried class paid Rs365 billion in income tax during July–February FY2025-26, exceeding the combined contribution of retailers, wholesalers, exporters and property-related segments, according to official data. The collection rose from Rs332 billion in the same period last year, despite limited relief in tax slabs, indicating a continued increase in the tax burden on salaried individuals.

Over a longer period, tax payments from the salaried segment have increased significantly, rising by over 400% between 2019 and 2024.

A recent study shows that from 2020 to 2025, salaried individuals contributed Rs1,144.94 billion in taxes, compared to Rs16.54 billion from retailers and Rs35.23 billion from wholesalers and distributors.

Officials said the imbalance reflects a narrow tax base, with large segments of the economy remaining outside the formal system.

According to the State Bank of Pakistan, out of around 5 million micro, small and medium businesses, only 179,383 retailers have installed point-of-sale systems, indicating limited documentation in the retail sector.

The government has not finalised any new measures to expand the tax net to retailers in the upcoming FY2026-27 budget, despite discussions during recent engagements with the International Monetary Fund.

Experts said sectors such as agriculture, real estate, wholesale and retail trade have historically remained under-taxed, with limited progress in documentation.

They noted that the tax system relies heavily on salaried individuals and formal businesses, as they are easier to track and tax.

Recent policy steps included bringing high-income pensioners into the tax net, but their contribution remains limited in the current fiscal year.

Officials said that without broadening the tax base, there is limited scope to reduce the tax burden on salaried individuals.