ISLAMABAD: In a significant revelation, the Federal Board of Revenue (FBR) has announced a remarkable 200% surge in salary tax collection over the past five fiscal years, marking a historic acceleration in Pakistan’s direct tax landscape. This dramatic increase underscores a deliberate fiscal strategy that has increasingly relied on salaried individuals to contribute to the nation’s revenue.
According to new figures released by the FBR, the collection of tax on salaries under Section 149 of the Income Tax Ordinance, 2001, skyrocketed from Rs129.43 billion in fiscal year 2019–20 to a record-breaking Rs391 billion in 2023–24.
Private and Public Sector Contributions Soar
The FBR’s detailed breakdown of salary tax collection highlights contributions from various employment segments:
Private Sector Employees: Led the way by contributing a colossal Rs273 billion in 2023–24, a staggering 179% rise from Rs98 billion in 2019–20. This reflects both stricter enforcement and a growing formalization of the private job market.
Federal Government Employees: Showed an even more astonishing 354% increase in salary tax collection, reaching Rs59 billion in FY2023–24, compared to just Rs13 billion five years ago.
Provincial Government Workers and Public Corporations: Their collective share also saw substantial growth, ballooning by 227% to Rs59 billion from Rs18 billion in 2019–20.
Cornerstone of Overall Direct Tax Performance
This phenomenal leap in salary tax collection serves as a cornerstone of the FBR’s overall direct tax performance. The FBR reported that Pakistan’s total direct tax collection jumped by an impressive 194%, rising from Rs1.53 trillion in 2019–20 to Rs4.50 trillion in 2023–24. This growth indicates that the country’s tax machinery is gaining traction, with a particularly pronounced impact among salaried classes.
The FBR has lauded this development as a major policy success, attributing the unprecedented collection performance to improved digital tracking, advanced data analytics, and more aggressive enforcement measures. However, critics argue that the burden has disproportionately fallen on salaried individuals, who possess limited avenues for tax planning compared to businesses.
With this eye-popping five-year transformation, the FBR has undeniably positioned salary earners at the heart of Pakistan’s evolving tax narrative, highlighting their crucial role in the nation’s revenue generation efforts.
