ISLAMABAD: Pakistan salaried workers paid an estimated Rs630 billion in income tax during fiscal year 2025-26, exceeding the real estate sectors tax contribution by 127 percent, even as the federal government introduced significantly larger tax relief for property transactions in the new budget.
According to provisional estimates, the salaried class contributed Rs630 billion in income tax during the fiscal year, including book adjustments. This was Rs24 billion, or 4 percent, higher than the Rs606 billion collected from salaried taxpayers in fiscal year 2024 to 2025. Government officials said the final figure may change slightly after reconciliation of June data.
Tax authorities said the Accountant General of Pakistan Revenue was compiling book adjustments related to income tax payments by federal employees and some personnel of the armed forces. Book adjustments stood at Rs40 billion during the July to May period and are expected to reach about Rs47 billion for the full fiscal year.
The real estate sector paid Rs278 billion in withholding taxes under Sections 236C and 236K on the sale and purchase of properties. The amount was Rs51 billion, or 17 percent, higher than the previous fiscal year.
Despite the higher tax contribution from salaried workers, the federal government reduced income tax rates for the salaried class by an estimated Rs52 billion in the new budget. The tax rate on monthly income of up to Rs267,000 was reduced from 23 percent to 20 percent, while the rate on monthly income of up to Rs341,000 was lowered to 25 percent.
The government also set a 29 percent tax rate for monthly income of up to Rs467,000 and introduced a 32 percent rate for monthly income of up to Rs583,000.
For monthly income above Rs583,000, equivalent to more than Rs7 million annually, the maximum tax rate remained 35 percent after the threshold was raised from Rs4.1 million to Rs7 million. The change reduced the annual tax liability for eligible individuals by up to Rs257,000.
The federal cabinet was informed that the new budget provided about Rs115 billion in income tax relief to the real estate sector.
The government merged three withholding tax slabs on property sales into a single rate of 2.75 percent, replacing the previous maximum rate of 5.5 percent. Provisional figures showed the government collected Rs191 billion from property sales during fiscal year 2025 to 2026, an increase of Rs73 billion, or 62 percent, from the previous year.
The withholding tax rate on property purchases was reduced from 2.5 percent to 1.25 percent. This marked the second consecutive year of tax reductions on property purchases. Provisional data showed tax collection from property purchases declined by 27 percent to Rs87 billion, compared with Rs119 billion in the previous fiscal year.
The government also introduced an optional fixed income tax scheme for retailers. Under the scheme, eligible traders can pay income tax equal to 1 percent of their sales and receive exemption from the requirement to install digital economy instruments and from tax audits. Retailers will also have the option to leave the scheme after one year.
