Income tax contributions from Pakistan’s already burdened salaried class surged by over 10 percent to Rs. 315 billion during the first seven months of the current fiscal year, even as a growing number of skilled professionals continue to leave the country in search of better opportunities and lower tax regimes.
According to provisional data compiled by the Federal Board of Revenue (FBR), salaried individuals paid Rs. 315 billion in income tax during July–January, compared to Rs. 285 billion in the same period last year, an increase of Rs. 30 billion or 10.5 percent.
The amount paid by salaried employees in both the public and private sectors remained more than double the tax collected from the real estate sector during the same period. The Rs. 315 billion figure excludes book adjustments and payments made by certain contractual employees under Section 153-B of the Income Tax Ordinance, sources said.
Despite being a relatively small segment of the population, the salaried class continues to shoulder a disproportionate tax burden as the government focuses collection efforts on the existing pool of taxpayers instead of effectively broadening the tax base.
On average, salaried individuals pay around 38 percent of their gross income in taxes — significantly higher than regional peers and far more than what is paid by sectors such as real estate and retail.
The heavy taxation has coincided with an accelerating brain drain. Data from the Bureau of Immigration and Overseas Employment shows that out of 762,000 Pakistanis who left the country last year, around 254,180 were skilled, highly skilled, or highly qualified individuals.
Among them, 222,171 were classified as skilled workers, while 13,657 were highly skilled and 18,352 highly qualified. The exodus included 5,659 chartered accountants and 3,795 doctors who left Pakistan in 2025.
Analysts warn that Pakistan’s economy has so far avoided default largely due to remittances from overseas Pakistanis. Meanwhile, exports declined by 7 percent during the first seven months of the fiscal year and foreign direct investment fell 47 percent in the first half of the year.
However, the government disputes claims that skilled professionals are abandoning the country at scale. During a recent meeting of the Senate Standing Committee on Finance, Finance Minister Muhammad Aurangzeb said Pakistan earns around $4-5 billion annually from IT exports, indicating that skilled workers are still operating domestically.
He also highlighted that the income tax rate for people earning Rs. 100,000 per month was reduced from 5 percent to 1 percent, but admitted that tax relief for higher-income earners could not be extended due to limitations under the IMF programme.
Sector-wise data shows non-corporate employees paid the highest amount at Rs. 139 billion, up 14 percent year-on-year. Corporate sector employees contributed Rs. 100 billion, an increase of 16 percent.
Provincial government employees paid Rs. 44 billion, marking an 8 percent decline from last year, while federal government employees contributed Rs. 31.5 billion, up 9 percent.
The government’s new tax on wealthy pensioners, applied to pensions exceeding Rs. 10 million annually for retirees under 70 — generated only Rs. 30 million during the first seven months, highlighting its limited impact.
Meanwhile, the FBR has struggled to sustain reforms aimed at broadening the tax base. Several measures were rolled back under pressure, despite FBR Chairman Rashid Langrial promising the Senate committee to identify influential individuals obstructing enforcement.
The real estate sector also faced higher taxes. Withholding tax on plot sales rose 63 percent to Rs. 106 billion, while collections on plot purchases fell 29 percent to Rs. 47 billion after rate cuts on buyers.
Overall, the government collected Rs. 152 billion in withholding taxes from the real estate sector in 7MFY26, up 17 percent year-on-year.
Are we forgetting the fact that corporations get tax breaks.