Salaried Class
ISLAMABAD: In a revealing development amidst ongoing efforts to expand Pakistan’s tax base, it has emerged that the salaried class has become the highest contributor to the national treasury in terms of income tax for the fiscal year 2024–25 (FY25), surpassing both exporters and retailers combined.
According to a report, the Federal Board of Revenue (FBR) collected a record-breaking Rs545 billion in income tax from salaried individuals during the fiscal year ending June 30, 2025.
This contribution is more than double the combined tax payments made by exporters and retailers. The salaried segment alone paid over three times the amount contributed by exporters and nearly eight times more than what was collected from retailers.
Despite earning in U.S. dollars, exporters contributed only Rs180 billion in the last fiscal year. Meanwhile, retailers — a group considered to have deep political connections across party lines — paid Rs62 billion under Sections 236G and 236H of the Income Tax Ordinance.
A top official source confirmed that the salaried class paid Rs545 billion in FY25, up from Rs367 billion in FY24, marking an increase of Rs178 billion year-on-year. This staggering growth in tax contribution highlights the increasing burden on Pakistan’s salaried population and the persistent challenges in bringing other sectors into the formal tax net.
The much-publicized Tajir Dost Scheme (TDS), which aimed to integrate retailers into the tax system, largely failed to gain traction, despite lofty claims by the authorities. In the absence of widespread voluntary compliance, the FBR resorted to using Sections 236G and 236H to extract taxes from retailers.
Under 236G, a 2% tax was applied to the gross sales of distributors, dealers, and wholesalers (excluding fertiliser sales), while 236H imposed a 2.5% tax on the gross sales of retailers who chose to remain outside the formal tax system.
When contacted for comment, FBR Spokesperson and Member Tax Policy Dr. Najeeb Memon acknowledged the disproportionate contribution of the salaried class and noted that in response, the government has provided some relief to low-income earners.
He stated that the tax rate for the first income slab — those earning between Rs600,000 and Rs1.2 million annually — has been reduced from 5% to 1%.
For the second slab, covering incomes between Rs1.2 million and Rs2.2 million, the rate has been cut from 15% to 11%. Dr. Memon said this adjustment is expected to provide a collective relief of Rs50 billion to the salaried class in the ongoing fiscal year 2025–26.
On the issue of retailer compliance, Dr. Memon maintained that stricter enforcement mechanisms will gradually yield results. He argued that those who wish to keep significant bank deposits, buy property, or purchase vehicles will find it increasingly difficult to stay out of the formal tax system.
This fiscal revelation has reignited debate over tax equity in Pakistan, as the salaried class continues to shoulder a disproportionately large share of the nation’s tax burden, while other powerful sectors remain largely under-taxed.
