KARACHI: The Regional Tax Office (RTO) II Karachi of the Federal Board of Revenue (FBR) has posted a record Rs154 billion in salary tax collection during fiscal year 2024–25, reflecting a sharp 44% increase compared to Rs107 billion collected in the previous fiscal year.
The impressive growth highlights stronger withholding tax compliance, better enforcement, and a wider tax base among salaried individuals in Karachi.
The collection falls under Section 149 of the Income Tax Ordinance, 2001, which requires employers to deduct income tax at source from employee salaries before making payments.
The steady increase in revenue under this head indicates improved tax administration, stronger compliance measures, and expanded monitoring of salaried income across both the public and private sectors.
According to the latest figures, federal government employees contributed Rs13.85 billion in salary tax during FY25, compared to Rs9.85 billion collected in the previous fiscal year.
This reflects a 40% increase in withholding tax collection from federal employees.
A notable rise was also recorded in collections from Sindh government employees falling under the jurisdiction of RTO-II Karachi.
Tax collection from this segment surged to Rs9.52 billion, compared to Rs5.78 billion in the previous fiscal year, showing a strong 65% growth.
The private sector remained the largest source of salary income tax collection, contributing Rs131 billion during FY25.
This represents a substantial 43% increase compared to Rs91.47 billion collected in the previous year.
The figures underline growing tax compliance among private sector employees as well as tighter oversight by the tax authorities.
Officials attributed the record collection to a combination of:
Stricter enforcement measures
Improved taxpayer documentation
Enhanced digital monitoring systems
Better data integration and verification
The increasing use of technology by the FBR has made it easier to identify income sources, track payroll records, and ensure that employers deduct the correct amount of tax from salaries.
Tax experts believe that continued automation, digitization, and administrative reforms within the FBR could further strengthen salary tax collection in the years ahead.
A sustained rise in direct tax collection from salaried individuals can help improve Pakistan’s fiscal stability and reduce the country’s dependence on indirect taxation.
The strong performance of RTO-II Karachi in salary tax collection reflects the growing importance of the salaried class in Pakistan’s tax structure.
With salary withholding continuing to rise, the development also raises broader debate over the tax burden on salaried individuals, especially at a time when inflation and cost-of-living pressures remain high.
