Salaried individuals paid 21% more in income tax during the first two months of the current fiscal year, contributing Rs. 85 billion, indicating that the nominal rate cut announced in the budget did little to ease their financial burden.
Compared to Rs. 70 billion in July–August of last fiscal year, their contributions rose to about Rs. 85 billion this year, according to a report in Express Tribune.
Despite the nominal reduction in rates, salaried individuals still paid roughly Rs. 15 billion more. The 21% jump comes on top of an already elevated base last year when the salaried class’s contributions had surged by more than half due to steep rate hikes. For employees who pay tax on gross salaries without expense adjustments, the record-high contributions significantly reduced take-home income for a large segment of society.
In the previous fiscal year, salaried persons paid Rs. 555 billion in income taxes, an increase of 51% (Rs. 188 billion) over the preceding year. The government, in its budget, marginally eased the burden on those earning up to Rs. 3.2 million annually, claiming a benefit of Rs. 56 billion. However, compared to actual contributions, this relief proved negligible.
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Breakdowns show that non-corporate sector employees paid Rs. 41.5 billion in income tax last year, up by Rs. 8.5 billion (26%), while corporate sector employees contributed Rs. 20 billion, higher by Rs. 5.2 billion (26%). Provincial government employees paid nearly Rs. 10.5 billion, an increase of Rs. 626 million (6%), while federal government employees paid Rs. 7.6 billion, up by Rs. 552 million (8%), according to provisional FBR data for July–August.
