ISLAMABAD: The Federal Board of Revenue (FBR) collected Rs518.48 billion in income tax from salaried individuals during the first eleven months (July–May) of fiscal year 2025-26, recording a year-on-year decline of nearly 6 percent.
According to official data, salary tax collections stood at Rs518.48 billion during 11MFY26 compared to around Rs555 billion collected during the same period of the previous fiscal year.
The decline comes amid growing discussions over possible tax relief for the salaried class in the upcoming Budget 2026-27. Salaried taxpayers have consistently demanded lower tax rates, arguing that rising inflation and increasing living costs have significantly reduced disposable incomes.
Despite these demands, substantial tax relief for salaried individuals appears unlikely as the government continues to face revenue pressures and fiscal targets.
The latest figures contrast with the strong growth trend witnessed in recent years. Salary tax collections reached approximately Rs605.59 billion in FY2024-25, reflecting a sharp increase from previous fiscal years.
FBR records show that income tax collected from salaried individuals rose steadily from around Rs152 billion in FY2020-21 to Rs196.25 billion in FY2021-22, Rs276 billion in FY2022-23, and Rs391 billion in FY2023-24. The growth was largely driven by higher taxable incomes, increased compliance, and enhanced withholding tax mechanisms.
Tax experts believe the decline in FY2025-26 may be linked to several factors, including slower wage growth, changing employment patterns, and broader economic challenges affecting household incomes.
Officials noted that if the downward trend continues through the final month of the fiscal year, FY2025-26 would become the first year in six years to record an annual decline in salary tax collections.
The salaried class remains one of Pakistan’s largest contributors to direct tax revenues, with income tax deducted at source continuing to play a critical role in FBR’s overall revenue collection framework.
As budget preparations enter their final stage, taxation of salaried individuals is expected to remain a key policy issue, with the government balancing demands for tax relief against the need to maintain revenue growth.
