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Business Recorder
19-06-2025
- Business
- Business Recorder
Pakistan salaried class rejects govt's claim of giving relief in income tax
Representatives of the Salaried Class Alliance of Pakistan (SCAP) said on Thursday the government had done a 'number juggling' and given almost no relief in income tax to the salaried individuals in the budget proposals for the fiscal year 2025-26. In a press conference at the Karachi Press Club on Thursday, they pointed out that the tax authorities have targeted to collect Rs540 billion in income tax from employees working in regulated sectors in FY26, compared to Rs550 billion to be received in the outgoing FY25. 'The Rs10 billion relief to the entire working class nationwide is a so-called relief. This is number juggling,' said Bilal Farooq Rizvi, a member of the SCAP. 'We reject the government's claim of relief to the salaried class people (in the budget 2025-26),' he said. According to the Federal Board of Revenue (FBR) reports, the income tax collection from salaried class people would be Rs550 billion in FY25, higher by Rs112 billion compared to FBR's set target for the outgoing year. Numbers speak: Sindh agriculturalists spend more on vehicle registration, pay less in income tax According to the budget proposals for FY26, the tax rate for those earning Rs600,001 to Rs1.2 million has been slashed to 2.5% from 5%. Individuals earning between Rs1.2 million and Rs2.2 million will pay 11%, down from 15%, along with a drop in the fixed tax component from Rs30,000 to Rs6,000. For the Rs2.2 million to Rs3.2 million bracket, the rate has been reduced to 23% from 25%, and the fixed tax lowered from Rs180,000 to Rs116,000. For those earning above Rs3.2 million annually, the rates remain unchanged. The 30% tax on incomes up to Rs4.1 million and 35% for those earning more continues. However, fixed taxes for the two slabs have been reduced to Rs346,000 and Rs616,000 from Rs430,000 and Rs700,000 respectively. A slight relief has also been provided in the form of a 1 percentage point cut in the surcharge, down to 9% from 10% for individuals earning more than Rs10 million a year. Adeel Khan, another SCAP member, claimed 'the income tax collection from salaried people has jumped 7 to 8-time in the past 3 to 4-year, increasing to Rs550 billion in FY25 compared to Rs70-80 billion a few years ago.' Budget 2025-26: Pakistan govt offers tax relief to salaried class, but representatives unhappy The government has targeted salaried class people to achieve the FBR tax collection target of Rs14.1 trillion in FY26, 'as it knows this is the soft target and they will not restore to violent protests and sit-ins and will neither block roads like political parties and shopkeepers do to get their demands accepted,' he added. Khan said the government provided a meager relief of a maximum of Rs7,000 a month in income tax to the people appearing in middle income groups, reducing their monthly tax burden to merely 'Rs493,000 a month in FY26 from Rs500,000 a month paid in FY25'. The employees working in the formal sectors were given a minimum relief of only Rs20,000 a month in income tax to the people falling in the middle income brackets. 'The provided so-called relief is no relief. This would make almost no difference in our lives,' he said. SCAP member Iesha Fazal said, 'The provided relief is insignificant. This is tantamount to playing with the salaried class people. This is a joke. We reject it'. They appealed to the authorities concerned to reduce the income tax rates by at least 2.5% for all the taxable slabs, including the individuals falling in the upper income brackets. The government can still make changes in its proposals, as the Parliament is yet to give its official nod to the proposed budget and Finance Bill 2025. 'Pakistan salaried class paid 5 times more taxes than exporters, retailers in outgoing FY25' Another SCAP member Rizwan Hussain said they would file a case in a court of law to get the due relief in income tax if the government approved the proposed tax rates as it was in the Finance Bills 2025. He reiterated SCAP's old demand of removing the super tax completely, which the government reduced by 1% to 9% in the budget proposals for FY26. Hussain also demanded relief in taxes on investment in mutual funds and similar investment products FY26.
Business Recorder
10-06-2025
- Business
- Business Recorder
Budget 2025-26: Pakistan govt offers tax relief to salaried class, but representatives unhappy
In a move to ease the tax burden on the working population, Finance Minister Muhammad Aurangzeb has announced cuts in income tax rates for low- to middle-income salaried individuals in the federal budget for 2025-26. However, representatives of the salaried class remain dissatisfied, citing minimal relief and continued neglect of broader tax reforms. The budget maintains the income tax exemption threshold at Rs600,000 annually, rejecting the long-standing demand by the Salaried Class Alliance of Pakistan (SCAP) to increase it to Rs1.2 million. The government has instead focused on offering limited tax rate reductions for individuals earning between Rs600,001 and Rs3.2 million annually. Budget 2025-26: Pakistan targets 4.2% growth as Aurangzeb presents proposals 'for a competitive economy' According to the Finance Bill 2025-26, the tax rate for those earning Rs600,001 to Rs1.2 million has been slashed to 1% from 5%. Individuals earning between Rs1.2 million and Rs2.2 million will pay 11%, down from 15%, along with a drop in the fixed tax component from Rs30,000 to Rs6,000. For the Rs2.2 million to Rs3.2 million bracket, the rate has been reduced to 23% from 25%, and the fixed tax lowered from Rs180,000 to Rs116,000. For those earning above Rs3.2 million annually, the rates remain unchanged. The 30% tax on incomes up to Rs4.1 million and 35% for those earning more continues. However, fixed taxes for the two slabs have been reduced to Rs346,000 and Rs616,000 from Rs430,000 and Rs700,000 respectively. A slight relief has also been provided in the form of a 1 percentage point cut in the surcharge, down to 9% from 10% for individuals earning more than Rs10 million a year. 'Pakistan salaried class paid 5 times more taxes than exporters, retailers in outgoing FY25' While these measures appear to provide some reprieve for the salaried class, SCAP has called them insufficient. 'The reduction in income tax rates for salaried individuals is insignificant,' said Komal Ali, a member of SCAP. 'Any relief is being negated by increased tax rates on investment avenues such as banking products and mutual funds, which many salaried individuals rely on.' She also criticized the government for failing to widen the tax net. 'The budget is silent on taxing millions of wealthy individuals who remain outside the tax system. The Finance Minister did not mention efforts to bring agriculture or the retail sector into the fold,' she added. In FY25, salaried individuals contributed over Rs550 billion to the national exchequer, making them one of the most tax-compliant groups in Pakistan.
Business Recorder
30-05-2025
- Business
- Business Recorder
Salaried people: SCAP demands immediate relief
KARACHI: The Salaried Class Alliance of Pakistan (SCAP) has called on the government to provide immediate relief to the salaried segment in the upcoming Finance Budget 2025-2026, citing disproportionately high tax burdens, rising inflation, and worsening economic conditions. According to the Alliance, salaried individuals, comprising government and private employees including professionals in media, banking, education, and corporate sector, are the only segment paying its due share of income tax, without any adjustment, in Pakistan. Despite this, they have borne the brunt of recent fiscal policies, including increased slab rates and a 10 percent surcharge on higher incomes, introduced in the last budget. 'The middle class has been crushed. While inflation has doubled in the past three years, the minimum taxable income threshold remains stuck at Rs 50,000 per month,' the SCAP representatives said in press conference here on Thursday at Karachi Press Club. Saif Tirmizi, Hasnain Ashraf, Nasir Hussain Taibani, Komal Ali, Adeel Khan and Rizwan Hussain of the Alliance were present at the Press conference. The Alliance warned that continued neglect of this segment is contributing to the country's worsening brain drain. Emigration of skilled and educated professionals reportedly surged by 119% over the past year, with heavy taxation cited as a key factor. Moreover, the SCAP pointed to structural tax inequalities. In FY25, salaried individuals are estimated to contribute more than Rs 550 billion in taxes, compared to only Rs. 100 billion collectively paid by exporters and retailers. While, the agriculture sector, contributing nearly 20 percent of GDP in the economy, however contributes less than 1 percent in tax revenue. They said that some landlords and privileged groups enjoy vast exemptions, while wage earners face tax rates as high as 35 percent with additional surcharge of 10 percent. Additionally, the Alliance expressed concern over growing informality in the economy, where businesses opt to pay salaries in cash to avoid high tax deductions—undermining documentation and long-term development. Salaried Class Alliance Pakistan demanded the government that to raise the minimum taxable income threshold to Rs. 100,000 per month and restore tax rates to FY22 levels. They also urged the government to reduce expenditure to support relief for higher tax rate taxpayers and abolish 10 percent Surcharge, as it is nature of penalty being tax on time and in unfair to levy on compliant taxpayers. They also suggested for re-introducing of tax credits and immediate reinstatement of tax credits. In order to widen the tax net by bringing untaxed sectors such as agriculture and informal businesses into the fold, they urged. The Alliance also emphasized that fair taxation is essential not only for economic justice but also for preventing further erosion of the country's skilled workforce and promoting sustainable economic development. Copyright Business Recorder, 2025
Business Recorder
29-05-2025
- Business
- Business Recorder
‘Pakistan salaried class paid 5 times more taxes than exporters, retailers in outgoing FY25'
Pakistan salaried people's contribution to the tax net was projected to be five times higher than that of the country's exporters and retailers in the outgoing financial year 2024-25, a member of the Salaried Class Alliance of Pakistan (SCAP) said on Thursday. The Federal Board of Revenue (FBR) collected Rs430 billion in revenue in income tax from salaried people in the first 10-month of the outgoing fiscal year 2024-25, said Nasir Hussain Taibani, a member of the SCAP, in a press conference at the Karachi Press Club. Salaried class: Call for revision of tax slabs, rise in exemption limits The contribution was estimated to surpass Rs550 billion in the full current fiscal year, compared to Rs75 billion in FY19 and Rs368 billion collected in FY24, he added. 'Salaried people are subject to heavy taxes compared to only Rs100 billion collectively paid by exporters and retailers,' Taibani said. The group demanded reliefs in the upcoming budget for FY2025-26, claiming the collection of revenue in taxes had reached its optimal level. 'The time has come when the elevated tax rates would start impacting collection of revenue and economic growth, and expedite flight of capital and brain-drain from the country to abroad,' Komal Ali, another member of the SCAP. Citing Laffer Curve theory at the press conference, Komal Ali said the existing tax rates 'are too high' on the income of salaried people in Pakistan. If the government did not opt for tax cuts and tax credits, the collection of revenue and economic activities would start to decline, she envisaged. 'The higher tax rates will expedite brain-drain of highly skilled and well-educated people, and flight of capital, from Pakistan to abroad.' Meanwhile, Taibani further said the salaried class paid up to 35% in taxes. In addition to that, a section of the them also paid a 10% surcharge, he added. 'On the other hand, they are subject to indirect taxes on purchase of goods, and health and education fees. This means a big portion of their income is going into taxes, badly impacting their disposable income.' He recommended the government to reduce the number of income tax slabs back to 2022-23 level for them, cut higher rate of taxes, double the threshold of income tax exempted salary to Rs100,000 a month compared to Rs50,000 a month at present. Taibani also demanded the government restore tax incentives on investment in products like mutual funds and pension funds, and remove surcharge of 10% on the income tax. He maintained the government should increase the number of taxpayers in the country through bringing agriculture and retail sectors into the tax net instead further increasing tax rates for the people and the sectors of the economy 'already paying heavy taxes'. Hasnain Ashraf, another member of the alliance, said the power of the salaried class to pay the taxes 'has surpassed maximum level, leaving no financing to buy homes and cars'. The government should rather control its expenditures and fix the loss-making entities being maintained at the cost of the taxpayers, he added. According to the SCAP, it reached out to almost all the major political parties having representation in the Parliament to raise voice for the salaried class, but 'none of them did so'. The group said it would approach courts of law to fight their tax case if the government avoided giving relief in the upcoming budget to announced on June 10. 'The middle class (middle income groups) has been crushed. While inflation has doubled in the past three years, the minimum taxable income threshold remains stuck at Rs50,000 per month,' the SCAP stated in a press release. 'Continued neglect of this segment [salaried class] is contributing to the country's worsening brain drain. Emigration of skilled and educated professionals reportedly surged by 119% over the past year, with heavy taxation cited as a key factor,' it read. The agriculture sector, contributing nearly 20% of the country's gross domestic product (GDP), contributes less than 1% in tax revenue, according to the SCAP. 'Some landlords and privileged groups enjoy vast exemptions, while wage earners face tax rates as high as 35% with additional surcharge of 10%.' The alliance expressed concerns for 'growing informality in the economy', where businesses opt to pay salaries in cash to avoid high tax deductions-undermining documentation and long-term development. The SCAP is comprised of government and private sector employees, including from the armed forces, banks, education institutes, media, and corporate enterprises.
