Pakistan’s salaried class paid more than three times as much income tax as the real estate sector during the first two months of the current fiscal year.

Tax officials said salaried workers paid Rs91 billion in income tax during July and August. That figure rose by Rs6.3 billion, or 7.5%, from the same period last year.

In contrast, income tax collection from the real estate sector fell to Rs28 billion.

The sector paid Rs39.4 billion in withholding taxes during the same period last year. The latest figure therefore represents a decline of about Rs11.2 billion.

The figures have renewed debate over the tax burden on salaried workers and the relief provided to the property sector in the latest federal budget.

Real Estate Tax Collection Drops 28%

Federal Board of Revenue data showed that income tax collection from real estate fell by about 28% during the first two months of the fiscal year.

The decline followed a major reduction in advance tax rates on property transactions.

The government cut the advance tax on the sale and purchase of immovable property by 50% in the latest budget.

For property sales, the government merged three tax slabs and introduced a single rate of 2.75%. The previous rate stood at 5.5%.

For property purchases, the tax rate fell from 2.5% to 1.25%.

The lower rates had a direct impact on tax collection.

Advance income tax collected from property sales fell from Rs27 billion to Rs18.4 billion during the first two months.

That represents a decline of Rs8.6 billion, or 32%.

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Tax collection from property purchases also fell from Rs12.4 billion to Rs9.7 billion. The decline amounted to Rs2.7 billion, or 22%.

Salaried Workers Continue to Pay More

The gap between the two groups has widened significantly.

The salaried class paid Rs91 billion in income tax during July and August. The real estate sector contributed Rs28 billion.

As a result, salaried workers paid around 225% more income tax than the real estate sector.

The government had also provided tax relief to salaried workers in the latest budget.

It allocated about Rs52 billion in relief by reducing income tax rates by up to three percentage points.

The government also abolished the 9% surcharge calculated on the highest tax rate of 35%.

At the same time, it increased the income threshold for the maximum 35% tax rate from Rs4.1 million to Rs7 million annually.

Despite these measures, salaried workers continue to face pressure from higher living costs.

Petrol Prices Add to Household Pressure

The salaried class also faces the impact of higher fuel and consumer prices.

The government has continued to recover international oil prices through domestic fuel prices.

Petroleum products also carry an Rs80-per-litre petroleum levy and a Rs5-per-litre climate support levy, according to the supplied data.

Frequent fuel price changes can also affect transportation and the prices of essential goods.

The resulting pressure is particularly significant for middle- and lower-middle-income households that depend mainly on fixed salaries.

Retail Tax Collection Also Declines

FBR data also challenges claims of a major increase in withholding taxes from the retail sector.

Wholesalers and retailers together paid Rs12 billion in withholding taxes during the first two months of the fiscal year.

That was Rs440 million, or 3.5%, lower than the amount collected during the same period last year.

The salaried class paid Rs79 billion more than wholesalers and retailers.

That means salaried workers contributed about 658% more in taxes than the combined wholesale and retail sector.

FBR Faces Collection Pressure

The FBR has also faced pressure over its overall tax collection.

The tax authority missed its August target by Rs27 billion, while overall growth remained almost flat.

The weak performance prompted FBR management to question members over their claims that enforcement would significantly increase revenue.

Prime Minister Shehbaz Sharif recently told industrialists that the government recovered Rs800 billion through enforcement during the last fiscal year.

That figure could not be independently verified.

FBR collected Rs13.01 trillion during the last fiscal year. The amount was Rs1.26 trillion, or about 11%, higher than the previous year.

However, the increase largely reflected economic growth and additional tax measures introduced in the budget.

Nominal GDP grew by 10.8%, while FBR collection increased by around 11%.

The tax-to-GDP ratio remained at about 10.3%, showing no significant improvement.

The government had also introduced Rs312 billion in additional tax measures in June 2025. Their full impact was not visible in the overall collection.

FBR has meanwhile expanded digitisation, faceless processes, production monitoring and litigation efforts.

However, the available figures raise questions about how much additional revenue enforcement alone has generated.

If enforcement had produced an additional Rs800 billion on top of economic growth and the budget’s tax measures, FBR’s collection could have exceeded Rs13.8 trillion last year.

The reported collection remained at Rs13.01 trillion.