Pakistan’s salaried workforce has paid a record Rs. 391 billion in income tax during the first nine months of FY2024, surpassing the previous fiscal year’s total and reflecting a staggering 56% year-on-year increase. This group now contributes 10% of the country’s total tax revenue, while traders and wholesalers remain lightly taxed, with traders contributing just Rs. 26 billion and wholesalers Rs. 17.5 billion, many of whom remain unregistered.

Despite initially targeting an additional Rs. 75 billion in taxes from salaried individuals this fiscal year, collections have already exceeded Rs. 140 billion, with three months still remaining. Employees are taxed on their gross income without deductions, and the highest tax bracket now faces an effective rate of 38.5%.

Breaking down contributions, non-corporate employees paid Rs. 166 billion (up 43%), corporate employees Rs. 117 billion (up 52%), provincial government staff Rs. 69 billion (up 103%), and federal employees Rs. 39 billion (up 65%).

Meanwhile, the Federal Board of Revenue (FBR) grapples with a Rs. 714 billion shortfall against its revised annual tax collection target of Rs. 12.3 trillion. Despite introducing Rs. 1.3 trillion in new taxes, economic slowdown and inflation continue to challenge revenue growth, leaving the FBR struggling to meet its projections.