The Govt has reported a sharp increase in tax revenue from the salaried class during the fiscal year 2024-25, highlighting the impact of recent tax reforms. According to data released by the Federal Board of Revenue (FBR), withholding tax collected from salaries rose to Rs. 605.6 billion, compared to Rs. 391.4 billion in 2023-24 — an impressive increase of 54.7 percent.
The Govt’s latest fiscal measures, including fewer income tax slabs and higher rates, have significantly increased tax deductions from employees’ salaries. This policy shift, officials say, was aimed at boosting revenue and meeting budgetary targets under the current economic stabilization plan.
Overall, the FBR collected Rs. 3,381.5 billion in withholding taxes in 2024-25, up 23.5 percent from Rs. 2,739.1 billion in the previous year. The share of withholding taxes in total direct tax collection stood at 59 percent, slightly below last year’s 60 percent.
The report showed that tax collected under the contracts category jumped 39 percent to Rs. 737.7 billion, while collections from electricity bills increased by 11.2 percent, reaching Rs. 144.4 billion. The surge in salary-based withholding tax, however, was the highest among all major categories.
The Govt has also observed positive growth in most tax collection areas. Fourteen out of the fifteen major withholding tax categories saw increases, except for bank interest and securities, which dropped by 1.6 percent.
Experts say the rise in tax collections will help the Govt strengthen fiscal stability and reduce its deficit. However, the growing burden on the salaried class may reduce disposable income and affect consumer spending in urban centers.
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The FBR report confirms that salaries now represent the second-largest source of withholding tax revenue, reflecting a structural shift in Pakistan’s income tax landscape.
