The salaried class contributed an additional Rs. 2 billion in revenue during the first month of the new fiscal year 2026-27, with tax collection from salaried individuals rising to Rs. 44 billion in July 2026 against Rs. 42 billion collected during the corresponding month of the previous fiscal year.
According to data compiled by the Federal Board of Revenue (FBR), the contribution of the salaried class has continued to increase despite the government’s repeated claims of providing relief to salaried individuals through the reduction and rationalization of income tax rates.
The data showed that the contribution of the salaried class stood at around Rs. 30 billion in July 2024, indicating a substantial increase in revenue collection from this segment over the past two years.
The salaried class primarily contributes income tax through withholding at source, with employers deducting tax from employees’ salaries and depositing the amount with the FBR. Such withholding constitutes advance collection of income tax and is subsequently adjustable against the taxpayer’s final annual tax liability.
The continued increase in collection from salaried individuals assumes significance amid the government’s efforts to broaden the tax base and increase tax revenues. The salaried segment remains one of the most documented segments of taxpayers because tax is generally deducted at source by employers.
On the other hand, withholding tax collection under Section 236C of the Income Tax Ordinance, 2001, amounted to Rs. 11 billion during July 2026. Section 236C relates to the collection of advance income tax from the seller or transferor of immovable property at the time of sale or transfer.
In other words, when a person sells or transfers an immovable property, the prescribed advance tax is collected from the consideration received by the seller. The FBR data further showed that withholding tax collection under Section 236K of the Income Tax Ordinance, 2001, stood at Rs. 4.5 billion during July 2026.
Section 236K relates to the collection of advance income tax from the purchaser or transferee of immovable property at the time of purchase or transfer. Thus, unlike Section 236C, which applies to the seller, Section 236K applies to the purchaser or transferee.
The combined collection under Sections 236C and 236K therefore amounted to Rs. 15.5 billion during July 2026, reflecting the substantial contribution of property transactions to withholding tax revenues.
The FBR’s framework treats Sections 236C and 236K as advance income tax provisions applicable to transactions involving immovable property, with rates depending on the applicable tax regime and taxpayer status.
The number of property transactions also witnessed a significant increase during the first month of the new fiscal year. According to the FBR data, around 90,000 property transactions were recorded during July 2026 compared with approximately 60,000 transactions in July 2025.
This represents an increase of 30,000 transactions, or 50 percent, year-on-year. The substantial increase in the number of transactions is particularly significant because the government has been seeking to facilitate documented transactions in the real estate sector and improve revenue collection through withholding mechanisms.
The increase in transactions also coincided with changes in the advance tax regime applicable to property transactions, which were aimed at reducing the tax burden and facilitating activity in the real estate market.
The FBR has separately clarified that Sections 236C and 236K cover advance income tax on the sale and purchase of immovable property, respectively. It has also provided specific facilitation for eligible overseas Pakistanis holding a POC or NICOP and meeting the prescribed non-resident conditions to avail themselves of the applicable filer rate.
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