ISLAMABAD – The salaried class in Pakistan paid 21% more income tax in the first two months of FY2025-26, contributing Rs85 billion compared to Rs70 billion in the same period last year, highlighting that the nominal relief announced in the budget provided little actual respite.
According to government sources, despite Finance Minister Muhammad Aurangzeb’s acknowledgment of limited fiscal space, the minimal tax rate cuts for individuals earning up to Rs3.2 million annually failed to ease their financial strain. The increase comes on top of last year’s record contributions, when salaried individuals paid Rs555 billion — a 51% jump from the previous year due to steep rate hikes.
Breakdown of Tax Contributions
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Non-corporate employees: Rs41.5 billion (+26%)
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Corporate sector employees: Rs20 billion (+26%)
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Provincial government employees: Rs10.5 billion (+6%)
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Federal government employees: Rs7.6 billion (+8%)
Meanwhile, the government’s attempt to generate revenue from wealthy pensioners by taxing annual pensions exceeding Rs10 million fell short, yielding just Rs180 million in two months, with yearly collections unlikely to cross Rs1 billion.
SECP Salary Controversy
Parliamentary scrutiny has also intensified over lavish salaries and perks at the Securities and Exchange Commission of Pakistan (SECP). The Auditor General of Pakistan (AGP) flagged “abnormal” increases in commissioners’ pay, with one official reportedly receiving Rs1.9 million annually for security guard expenses.
Senator Anusha Rahman criticized the SECP for granting commissioners allowances such as 10% house rent, 10% utility, and club memberships, while thousands of daily wagers in the government sector still earn below minimum wage. She has tabled a private member bill in the Senate to strip SECP’s board of its powers to set management salaries and is preparing a similar move against the State Bank of Pakistan.
Uneven Tax Burden
Despite the salaried class shouldering an ever-growing share of direct taxes, the government has struggled to bring traders and other influential sectors into the tax net. Enforcement measures — including restrictions on economic transactions by ineligible persons — were rolled back, while cash deposits in banks were equated with digital transactions, weakening compliance efforts.
The real estate sector also saw mixed results:
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Rs28 billion collected on sales of plots (+92%)
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Less than Rs13 billion collected on purchase of properties (-12%)
Analysts warn that while wage earners are consistently targeted, structural reforms to broaden the tax base remain elusive, further entrenching inequities in Pakistan’s revenue system.