Salaried Class Now Pays One-Third of Income Tax

The salaried class has emerged as major contributor in paying tax which accounts for around one-third of Pakistan’s total personal income tax (PIT) collection. It highlights an increasing tax burden on formal sector employees despite stagnant wage growth and limited fiscal space for middle-income earners.

According to official data for fiscal year 2024–2025, the government collected Rs555 billion in income tax from salaried individuals. This is up 110% from Rs264 billion in FY2022–2023 and more than sevenfold against Rs76 billion in FY2018–2019.

The total personal income tax collected from individuals during FY2024–2025 amounted to Rs1,936 billion, of which salaried taxpayers have contributed 29%. This is the highest share in tax collection ever recorded in Pakistan’s tax history.

When we compare it, in FY2018–2019, the salaried class accounted for only 10% of PIT collection. Over the past six years, this share has surged steadily each fiscal year which stood at  10%  in 2018–19. But it was up 12%  in 2019–20 and 12% in 2020–21.

It surged by 19% in 2021–22 and 25% in 2022–23. It also recorded increase of 29%  in 2024–25.

In the same period, the FBR had collected total revenue nearly tripled from Rs3,829 billion in FY2018–19 to Rs11,744 billion in FY2024–25. However, the salaried class’s share of total FBR revenue has remained modest, at just 5% in 2024–2025 which indicates individual taxpayers are paying more but the broader tax net remains narrow.

The data also shows that personal income taxes (including both salaried and non-salaried individuals) is now representing 16% of total FBR revenue against 19% in FY2018–19.

This has suggested that although overall PIT receipts have increased in absolute terms, their relative share in total tax revenue has slightly declined. It is mainly due to heavy reliance on indirect taxes such as sales tax and customs duties.

Read More: FBR Extends Income Tax Return Deadline to October 31

Between FY2021–2022 and FY2024–2025, the salary-related income tax has doubled in just three years. It went up from Rs264 billion to Rs555 billion.

In historical terms, Pakistan’s tax-to-GDP ratio has remained among the lowest in South Asia which account for around 9–10%. Despite repeated pledges of broadening the tax base, it is also interesting that less than 1% of the population files income tax returns, according to FBR statistics.