ISLAMABAD: Pakistan’s already overburdened salaried class paid a record Rs315 billion in income tax during July–January of FY2026, reflecting a 10.5% year-on-year increase, even as more than 254,000 skilled and highly qualified citizens emigrated in 2025 in search of better employment opportunities and lower tax regimes.
Provisional figures released by the Federal Board of Revenue (FBR) show salaried individuals contributed Rs315 billion in the first seven months of the current fiscal year, up from Rs285 billion during the same period last year — an increase of Rs30 billion.
These collections exclude book adjustments and tax payments made by certain contractual employees under Section 153-B of the Income Tax Ordinance.
Data further reveal that income taxes paid by public and private sector employees were more than double those contributed by the real estate sector, highlighting the government’s continued reliance on salaried taxpayers and manufacturers for revenue generation.
Experts say Pakistan’s salaried class now pays around 38% of gross income in taxes, far higher than regional averages and significantly above contributions from retailers and property dealers. Despite repeated assurances, little meaningful relief has been extended to salaried workers.
Brain Drain Accelerates as Skilled Workers Exit Pakistan
According to the Bureau of Immigration and Overseas Employment, 762,000 Pakistanis left the country in 2025, of whom 254,180 were skilled, highly skilled, or highly qualified.
The breakdown shows:
- 222,171 skilled workers
- 13,657 highly skilled professionals
- 18,352 highly qualified individuals
Among those leaving were 5,659 chartered accountants and 3,795 doctors, underscoring growing concerns about Pakistan’s accelerating brain drain, particularly among IT-trained professionals seeking better prospects abroad.
Remittances from overseas Pakistanis remain a critical economic lifeline, helping avert default as exports declined 7% during the first seven months of FY2026 and foreign direct investment fell 47% in the first half of the year.
Government Pushback on Skilled Exodus Narrative
However, the government disputes claims that all skilled workers are leaving.
Speaking to the Senate Standing Committee on Finance this week, Finance Minister Muhammad Aurangzeb stated that Pakistan earns approximately $4–$5 billion annually from IT exports, suggesting a significant number of professionals continue working domestically.
He also highlighted a reduction in income tax from 5% to 1% for individuals earning Rs100,000 per month, while admitting that tax relief for higher-income groups remains constrained under the ongoing IMF programme.
Sector-Wise Income Tax Contributions
FBR data indicate:
- Non-corporate sector employees: Rs139 billion (up 14%)
- Corporate sector employees: Rs100 billion (up 16%)
- Provincial government employees: Rs44 billion (down 8%)
- Federal government employees: Rs31.5 billion (up 9%)
Meanwhile, the newly introduced tax on wealthy pensioners — applicable to annual pensions exceeding Rs10 million for individuals under 70 — generated only Rs30 million during the July–January period.
Despite introducing pension reforms, the government last month again allowed retired employees to draw multiple pensions, weakening its cost-cutting objectives.
Real Estate Taxes Rise as Policy Reversals Continue
During the same period, withholding tax on plot sales surged 63% to Rs106 billion, while collections on plot purchases fell 29% to Rs47 billion following rate reductions announced in the federal budget.
Overall, the government collected Rs152 billion from the real estate sector, reflecting a 17% increase year-on-year.
Last month, the FBR once again raised property valuation rates in Islamabad Capital Territory by up to 75%, particularly in developing residential and commercial zones. Earlier increases of up to 900% had been rolled back until January due to market backlash and inclusion of Defence Housing Authority phases.
FBR Chairman Rashid Langrial has told the Senate Standing Committee on Finance that influential individuals were obstructing enforcement efforts and pledged to disclose their identities — albeit behind closed doors.
