The salaried class in Pakistan paid an estimated Rs630 billion in income tax during the fiscal year 2025-26, a sum that is 127% higher than the taxes paid by the real estate sector, according to provisional government estimates. The real estate sector, in contrast, contributed only Rs278 billion under withholding tax sections 236C and 236K on property transactions.
Tax Contributions and Budget Relief
The salaried class tax payment was 4% or Rs24 billion higher than the previous fiscal year's Rs606 billion, as per the Revenue Division's annual book for FY25. The final figure may adjust slightly after reconciled June data, officials said. The Accountant General of Pakistan Revenue (AGPR) is compiling book adjustments for federal employees and armed forces, with reconciled adjustments for July-May at Rs40 billion, expected to rise to Rs47 billion.
Despite the salaried class's massive contribution, the federal cabinet approved Rs115 billion in income tax relief for the real estate sector in the new budget. In contrast, the salaried class received only Rs52 billion in relief, as confirmed by Secretary Finance Imdadullah Bosal to the National Standing Committee on Finance.
Real Estate Tax Cuts and Collection Trends
The government merged three tax slabs on property sales into a single rate of 2.75%, down from a maximum of 5.5%. This cut follows a 50% reduction in the already low tax burden for the realty sector. In FY26, the government collected Rs191 billion on property sales, up Rs73 billion or 62% from the prior year. However, taxes on property purchases dropped 27% or Rs33 billion to Rs87 billion, compared to Rs119 billion a year earlier, due to a rate reduction from 2.5% to 1.25%.
The Pakistan Muslim League-Nawaz (PML-N) government had discouraged the real estate sector for two years but reversed its policy, potentially redirecting capital toward speculative and unproductive investments.
Salaried Class Tax Rate Changes
The government reduced the tax rate on monthly income up to Rs267,000 by 3% to 20%. For income up to Rs341,000, the rate fell to 25%, benefiting 160,000 taxpayers. Rates of 29% and 32% apply to incomes up to Rs467,000 and Rs583,000, respectively. For monthly income above Rs583,000 (over Rs7 million annually), a 35% rate applies, up from a threshold of Rs4.1 million. This reduces an individual's annual tax by Rs257,000. The total impact of these measures is Rs52 billion.
Incentives for Traders and Retailers
The government also introduced a new optional fixed income tax scheme for retailers, allowing them to pay 1% of sales as income tax while being exempt from installing digital economy instruments and audits. Traders can exit the scheme after one year, which may encourage initial tax registration and asset whitening, but risks short-term participation.
