Salaried Class Pays 360% More Tax Than Real Estate Sector in Pakistan

Salaried taxpayers in Pakistan paid nearly 360 percent more tax than the real estate sector during the first four months of the current fiscal year, according to provisional figures reported by ProPakistani. The widening gap follows a government decision to reduce property-related tax rates, which sharply lowered the sector's withholding tax contributions.

During July-October, the real estate sector paid just Rs. 42 billion in withholding taxes, down Rs. 34 billion or 45 percent from the same period last year. The decline came despite a pickup in property activity after the government reversed its policy of discouraging speculative investment in the sector.

The salaried class, by contrast, paid about Rs. 193 billion in income tax over the same four months, up Rs. 13.5 billion from Rs. 179 billion last year. Combined, retailers and the real estate sector paid only Rs. 67 billion, which is Rs. 126 billion less than what salaried taxpayers contributed.

The shift stems from budget measures that cut advance tax on property sales from 5.5 percent to 2.75 percent and on purchases from 2.5 percent to 1.25 percent. The government implemented the 50 percent reduction after the International Monetary Fund backed the move in June.

The figures come as the Federal Board of Revenue (FBR) reported a Rs. 95 billion shortfall for July-October, with revenue growth of only 6.5 percent. The real estate sector's tax payments have trailed the salaried class for several months, highlighting an ongoing imbalance in the country's tax base.

The data is likely to renew debate over tax burdens in Pakistan, where salaried employees face automatic deduction at source while other sectors, including property and retail, contribute proportionally less to national revenue.