Pakistan’s salaried class contributed Rs. 630 billion in income tax during the 2025-26 fiscal year, paying more than twice the amount collected from the property sector, despite the latest federal budget offering significantly greater tax relief to real estate transactions.
According to provisional estimates, salaried individuals paid Rs. 630 billion in income tax during FY26, an increase of 4% (Rs. 24 billion) compared to the previous fiscal year. The final figures may be adjusted after the Accountant General of Pakistan Revenues (AGPR) completes its reconciliation of June accounts.
In comparison, the real estate sector contributed Rs. 278 billion through withholding taxes collected under Sections 236C and 236K of the Income Tax Ordinance on the sale and purchase of immovable property. Although tax collections from the sector rose 17% year-on-year, the government has reduced these tax rates in the 2026-27 federal budget.
Finance Secretary Imdadullah Bosal stated that the new budget provides Rs. 52 billion in income tax relief for salaried taxpayers. Tax rates have been lowered across several income slabs, including a reduction from 23% to 20% for individuals earning up to Rs. 267,000 per month, while the next tax slab has been reduced to 25% for monthly incomes of up to Rs. 341,000.
Additionally, the income threshold for the highest 35% tax bracket has been increased from Rs. 4.1 million to Rs. 7 million annually, reducing the maximum annual tax burden by up to Rs. 257,000 for eligible taxpayers.
However, the property sector received an estimated Rs. 115 billion in tax relief—more than double the relief provided to salaried individuals.
Under the new budget, the withholding tax on property sales has been simplified into a single 2.75% rate, replacing the previous structure with a maximum rate of 5.5%. The withholding tax on property purchases has also been cut from 2.5% to 1.25%, marking the second consecutive year of tax reductions for property buyers.
Provisional data shows that during FY26, withholding tax collections from property purchases declined 27% to Rs. 87 billion, while collections from property sales increased 62% to Rs. 191 billion.
The budget also introduces an optional fixed tax regime for retailers, allowing eligible businesses to pay 1% of annual sales as income tax in exchange for exemptions from mandatory digital invoicing and tax audits. Businesses choosing this regime will have the option to exit after one year.
The latest tax measures signal a shift in government policy after two years of stricter taxation on the real estate market. The new concessions are intended to stimulate activity in the property sector while providing comparatively modest tax relief to Pakistan’s salaried workforce.
