ISLAMABAD: Pakistan’s salaried class paid approximately Rs630 billion in income tax during fiscal year 2025-26, according to provisional figures. The amount is 127 percent higher than the Rs278 billion collected from the real estate sector through withholding taxes on property sales and purchases.
The latest figures also show a 4 percent increase from the Rs606 billion paid by salaried taxpayers in the previous fiscal year. Final reconciled numbers may change slightly once June book adjustments are completed.
Salaried Class Remains the Largest Tax Contributor
The salaried class continues to be one of Pakistan’s largest and most consistent sources of tax revenue. Despite often being described as a heavily taxed segment with limited concessions, its contribution far exceeded collections from the real estate sector.
Finance Secretary Imdadullah Bosal informed the National Assembly Standing Committee on Finance that the government had provided around Rs52 billion in tax relief to salaried individuals under the new budget.
The revised tax structure reduced rates across several income slabs. Individuals earning up to Rs267,000 per month now face a 20 percent tax rate, down by three percentage points. Meanwhile, the tax rate for those earning up to Rs341,000 per month has been set at 25 percent.
Higher Income Threshold for Top Tax Rate
The annual income threshold for the highest 35 percent tax bracket has been increased from Rs4.1 million to Rs7 million.
According to government estimates, taxpayers in this bracket can save up to Rs257,000 annually under the revised tax structure.
Despite these adjustments, the overall Rs52 billion relief package remains relatively modest compared to the salaried class’s total tax contribution. Book adjustments carried out by the Accountant General of Pakistan Revenue also include federal government employees and portions of tax collected from the armed forces.
Real Estate Sector Receives Rs115 Billion Relief
The federal budget provides significantly larger tax incentives to the real estate sector, with an estimated Rs115 billion in relief for property transactions—more than double the relief allocated to salaried taxpayers.
Under the revised policy, multiple withholding tax slabs on property sales have been merged into a single 2.75 percent rate. Previously, the maximum withholding tax on property sales stood at 5.5 percent.
In addition, withholding tax on property purchases has been reduced by half, falling from 2.5 percent to 1.25 percent.
Budget Reverses Earlier Property Tax Tightening
The tax concessions represent a shift from the government’s earlier policy of discouraging speculative investment in the real estate market through higher transaction taxes.
Before the latest relief package, withholding tax collections from the property sector had increased by 17 percent year-on-year. Analysts expect the new concessions to slow future revenue growth from real estate transactions.
Economists have also cautioned that lower transaction taxes could once again encourage speculative investment in property instead of directing capital toward more productive sectors of the economy.
The budget also introduces similar optional fixed-tax schemes for certain trader categories, reducing compliance requirements for eligible businesses.