Salaried class tax payments surge to Rs285bn in seven months, minister hints at relief

The income tax contributions of Pakistan’s salaried class have surged to Rs285 billion in the first seven months of the current fiscal year, marking an increase of Rs100 billion compared to the same period last year. 

Data revealed that non-corporate sector employees paid Rs122 billion in income tax, an increase of Rs36 billion or 41% from the previous year. Corporate sector employees contributed Rs86 billion, marking a 50% rise, while provincial government employees paid Rs48 billion, almost double the previous year’s figure. Federal government employees paid Rs29 billion, reflecting a 63% increase.

Despite the heavy taxation on salaried individuals, the government has struggled to bring wholesalers and traders into the tax net. 

Speaking at a seminar on business reforms, Minister of State for Finance Ali Pervaiz Malik has indicated that the government is considering reducing the tax burden on salaried individuals in the next federal budget.

Malik acknowledged that the tax liability on salaried individuals had exceeded their capacity to pay, forcing them to bear a disproportionate share of the country’s revenue collection. 

He explained that despite Prime Minister Shehbaz Sharif’s reluctance, the government had imposed an additional Rs75 billion tax burden on salaried individuals in the last budget under pressure from the International Monetary Fund (IMF). However, the revenue collected from the salaried class has already surpassed that amount, with five months still remaining in the fiscal year.

The state minister acknowledged that at-source tax deductions from non-registered traders are being used as a benchmark for compliance, rather than enforcing direct taxation on the sector.

Meanwhile, the National Assembly on Tuesday deferred the approval of a bill aimed at restricting economic transactions by ineligible individuals, a move that could impact the real estate sector.