Salaried class shoulders major share of FBR collections in FY2025-26 as key sectors pay far less 

Once again, Pakistan’s salaried class remained a major tax contributor to the national kitty, with about Rs633 billion paid in income tax during FY2025-26, emerging as one of the largest contributors to Federal Board of Revenue (FBR) collections and exceeding the contribution of exporters, retailers and key real estate transaction taxes.

The FBR collected Rs13.010 trillion in the fiscal year ending June 30, 2026, according to provisional data compiled so far. Tax deducted from salaries stood at around Rs633 billion in FY2025-26, compared with Rs585 billion in FY2024-25, after including book adjustments.

However, separate preliminary estimates put the salaried class contribution at around Rs630 billion, with officials saying the final number may change after reconciled figures for June are completed.

Exporters paid Rs174 billion in income tax during FY2025-26, compared with Rs176 billion in the previous fiscal year.

From the real estate sector, the FBR collected withholding taxes from sellers and buyers under sections 236C and 236K of the Income Tax Ordinance. Under Section 236C, collection from property sellers rose to Rs191 billion in FY2025-26 from Rs118 billion a year earlier.

Under Section 236K, collection from property buyers fell to Rs87 billion from Rs120 billion in FY2024-25. This took the combined real estate withholding tax collection under the two sections to Rs278 billion.

Retailers contributed around Rs70 billion through withholding taxes under sections 236G and 236H, compared with Rs62 billion in the previous year. Collection under Section 236G stood at Rs25 billion, up from Rs24 billion, while collection under Section 236H increased to Rs45 billion from Rs38 billion.

The Express Tribune reported that the Accountant General of Pakistan Revenue is compiling book adjustments for income tax payments by federal employees and some payments made by the three armed forces. The AGPR’s reconciled book adjustments stood at Rs40 billion for July-May FY2025-26 and are expected to rise to Rs47 billion.

Tax relief in new budget

The government has set the FBR’s tax collection target at Rs15.264 trillion for the current fiscal year.

Secretary Finance Imdadullah Bosal informed the National Standing Committee on Finance that the government had provided Rs52 billion in relief to the salaried class.

For monthly income up to Rs267,000, the tax rate has been reduced by 3% to 20%. For monthly income up to Rs341,000, the rate has been reduced to 25%, covering 160,000 taxpayers in this bracket.

The government has set a 29% rate for monthly income up to Rs467,000 and introduced a 32% rate for monthly income up to Rs583,000. For monthly income above Rs583,000, or more than Rs7 million annually, the tax rate has been set at 35%.

The threshold for the maximum 35% tax rate has been increased from Rs4.1 million to Rs7 million annually, reducing annual tax liability for an individual by Rs257,000.

Real estate taxes cut

The federal cabinet was informed that Rs115 billion in income tax relief had been provided to the real estate sector in the new budget. On sale of property, three tax slabs have been merged and a single rate of 2.75% has been introduced, compared with the previous maximum rate of 5.5%.

On purchase of property, the tax rate has been reduced from 2.5% to 1.25%.

This is the second consecutive year in which the government has reduced taxes on purchase of plots. In FY2025-26, withholding tax collection on property purchases fell by 27%, or Rs33 billion, to Rs87 billion from Rs119 billion a year earlier.

Retailers get optional fixed tax scheme

The government has also introduced an optional fixed income tax scheme for retailers.

Under the scheme, retailers can pay 1% of sales as income tax and receive exemption from installing digital economy instruments and audit requirements.

Traders have also been allowed to exit the fixed tax scheme after one year.