Salaried Class Pays Big, But Relief May Be on the Way

Pakistan’s salaried class has stepped up its income tax contributions, with a remarkable surge to Rs285 billion in the first seven months of the current fiscal year—an increase of Rs100 billion compared to the same period last year.

The breakdown shows non-corporate sector employees paid Rs122 billion, marking a 41% increase from last year, while corporate sector employees contributed Rs86 billion, reflecting a 50% rise. Provincial government workers paid Rs48 billion, almost double their previous year’s contribution, and federal government employees handed over Rs29 billion, reflecting a significant 63% hike in their payments.

Despite these increases, the government continues to face challenges in expanding the tax net to include wholesalers and traders.

During a seminar on business reforms, Minister of State for Finance Ali Pervaiz Malik acknowledged the heavy burden placed on salaried individuals, indicating that the government is considering lowering taxes on them in the upcoming federal budget. He noted that the tax liabilities for salaried workers have outgrown their ability to pay, placing an unfair strain on their financial contributions to the national revenue.

Malik pointed out that the government had imposed an additional Rs75 billion tax burden on salaried individuals in the last budget, a decision made under pressure from the International Monetary Fund (IMF). Despite Prime Minister Shehbaz Sharif's initial reluctance, the revenue collected from this class has already exceeded the projected Rs75 billion, with five months still remaining in the fiscal year.

The Minister also mentioned that at-source tax deductions from non-registered traders are now being used as a benchmark for ensuring compliance, rather than directly taxing the sector.

On a separate note, the National Assembly delayed the approval of a bill intended to restrict economic transactions by ineligible individuals, which could significantly affect the real estate sector.