In the first five months of fiscal year 2024-25, Pakistan’s salaried class paid nearly Rs200 billion in income taxes, marking a significant increase of Rs72 billion compared to last year. This surge comes amid the Federal Board of Revenue’s (FBR) struggles to broaden the tax base and enforce compliance among untaxed sectors.
Private sector employees contributed Rs145 billion of the total, with federal and provincial government employees paying the rest. However, the tax burden has disproportionately risen for the salaried class following a 20-25% pay hike for government employees in the recent budget.
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Despite the rise in collections from salaried individuals, FBR’s tax recovery from audits dropped by 16% to Rs26 billion. Challenges like legal restrictions on freezing bank accounts have hindered enforcement. Additionally, the non-filer category remains intact as legislative amendments to abolish it are still pending.
FBR plans to address its shortfall by hiring 1,620 auditors to improve audit capacity, addressing its chronic understaffing. Critics, including the judiciary, have called for an end to aggressive tax recovery practices that undermine constitutional rights.
