The Federal Board of Revenue (FBR) has once again turned to the salaried class as its most reliable source of revenue, collecting over Rs130 billion in income tax during the first quarter (July–September) of FY2025-26. Despite a modest reduction in tax rates announced in the Finance Act 2025, Pakistan’s professionals, employees, and middle-income earners continue to bear a disproportionate share of the country’s tax load.
Salaried Class Becomes the Backbone of FBR’s Revenue
According to official data, the FBR’s collection from salaried workers rose from Rs110 billion in Q1 FY2024-25 to Rs130–138 billion this year, showing a significant year-on-year increase.
This growth has come even as overall economic pressures rise, inflation eats away at disposable income, and real wages struggle to keep up with the cost of living.
The salaried class now contributes nearly one-third of all personal income tax collected in Pakistan. In FY2024-25, the FBR received Rs1,936 billion in personal income tax (PIT), with salaried individuals accounting for around 29% of this total — up from just 10% in FY2018-19.
This steady climb clearly shows how tax reforms have failed to expand the net; instead, they’ve deepened the burden on already compliant citizens.
Exporters, Retailers, and Wholesalers Lag Far Behind
In comparison, the country’s exporters, wholesalers, and retailers — sectors with massive turnover — contributed far less.
During the same Q1 period, exporters paid Rs45 billion, wholesalers Rs14.6 billion, and retailers Rs11.5 billion, bringing their combined contribution to around Rs71 billion, almost half of what salaried employees paid.
This imbalance exposes the structural flaws in Pakistan’s taxation system. The informal economy continues to escape accountability, while the formal, documented salaried class faces automatic deductions every month.
Property Sector Also Contributing Less Despite Growth
The real estate sector, another area known for wealth accumulation, generated Rs60 billion through property sale and purchase taxes under sections 236C and 236K — still less than half of what came from salaries.
Even though tax rates on property sales have increased to 4.5% for properties below Rs50 million, the contribution remains modest when compared to the heavily taxed middle-income earners.
Experts Call It “Unfair Targeting” of the Middle Class
Tax analysts and economic experts have warned that this growing dependence on salaried workers is unsustainable.
One expert noted that the government is calling the rising collection a success, but in reality, it’s a result of “overburdening the existing taxpayers, not expanding the base.”
He added, “Reducing the upper tax slab threshold from Rs75 million to Rs4.1 million means professionals are paying up to 35% tax on modest incomes. It’s pushing our best minds to leave Pakistan — this isn’t reform, it’s economic self-destruction.”
Need for a Broader and Fairer Tax System
Pakistan’s total FBR revenue has tripled in recent years — from Rs3.8 trillion in FY2018-19 to Rs11.7 trillion in FY2024-25 — yet the share of salaried taxpayers in that figure remains around 5%. This indicates that while FBR’s total revenue is growing, its reliance on compliant, easy-to-tax segments is deepening.
For true economic reform, experts say the FBR must broaden the tax base, target non-filers, and digitalize informal sectors such as retail, property, and wholesale trade. Without this, the cycle of unfair taxation and public frustration will only grow.
The Silent Strength of Pakistan’s Salaried Class
Behind every revenue milestone that FBR celebrates are millions of Pakistanis whose salaries are taxed before they even reach their hands.
They are teachers, engineers, doctors, IT professionals, and civil servants — the backbone of the economy — yet they are the ones carrying an unequal load.
It’s time policymakers recognize that tax justice is not just about numbers; it’s about fairness, sustainability, and trust. Pakistan’s future economic stability depends on broadening the tax net, not tightening the noose around those already paying their fair share.
Frequently Asked Questions
How much FBR tax on salary?
The Federal Board of Revenue (FBR) applies income tax to salaried individuals based on progressive tax slabs.
For Tax Year 2025-26, the rates range from 0% to 35%, depending on your annual income.
For example:
- Income below Rs600,000 per year — No tax.
- Income between Rs600,001 – Rs1,200,000 — taxed at 2.5%.
- Income between Rs1,200,001 – Rs3,600,000 — taxed between 12.5%–22.5%.
- Income above Rs4.1 million per year — taxed at the highest slab of 35%.
These rates apply automatically for salaried employees, as tax is deducted monthly by employers and submitted to the FBR.
Who is a 45% tax payer?
There is no 45% tax rate for salaried individuals in Pakistan. The maximum tax rate is 35%, which applies to incomes exceeding Rs4.1 million annually (around Rs341,000 per month).
However, when indirect taxes (like sales tax, utility bills, fuel, and mobile charges) are added, the effective tax burden for many high-income professionals can feel close to 45%, which is why people often refer to themselves informally as “45% taxpayers.”
What is the minimum salary to pay income tax?
As per FBR rules for FY2025-26, the minimum annual salary required to pay income tax in Pakistan is Rs600,000 per year, or roughly Rs50,000 per month.
Anyone earning below this threshold is completely exempt from income tax.
Employers are legally required to deduct tax at source for all employees who earn above this limit and are registered with the FBR.
How to return file in FBR for salaried person?
Salaried individuals can easily file their income tax returns online through the FBR’s IRIS portal
Here’s how:
- Register or log in to your IRIS account using your CNIC number.
- Go to “Declarations” → “Income Tax Return (Salaried Person)”.
- Enter your salary details, deductions, and tax already paid by your employer.
- Attach any necessary documents (salary certificate, tax challans, etc.).
- Review and submit your return, then download your “Filer Certificate.”
Filing on time (before the annual deadline) ensures you stay on the Active Taxpayers List (ATL) and enjoy benefits such as lower withholding tax rates.