Pakistan finance committee approves salaried income tax rates despite calls for middle-class relief

Pakistan's National Assembly Standing Committee on Finance approved the government's proposed income tax rates for salaried individuals on Friday, dismissing calls from lawmakers for further middle-class relief. Committee members pressed the government to reduce taxes on people earning between PKR 100,000 and PKR 200,000 per month, arguing the bracket bears a disproportionate burden. Finance Minister Muhammad Aurangzeb said the government had already provided as much relief as current fiscal constraints allow.

What are the approved income tax rates for salaried individuals in Pakistan?

The committee approved a progressive tax structure that exempts annual income up to PKR 600,000, applies 1% on earnings between PKR 600,001 and PKR 1,200,000, and 11% on income between PKR 1,200,001 and PKR 2,200,000. Higher brackets attract rates of 23% and above, rising to a maximum of 35% for the highest earners. The super tax surcharge on annual salaries up to PKR 10 million has also been removed.

Why did lawmakers push for more salaried class tax relief?

Committee member Sharmila Faruqui argued that the existing 11% rate for individuals earning between PKR 100,000 and PKR 200,000 per month remained too high for a bracket she described as the core of Pakistan's middle class. Fellow committee member Shahida Akhtar Ali said middle-income households were feeling the impact of taxation most acutely. "The people who approach us are mostly from the middle class, and they consistently complain about the high level of taxation," she said.

How did the finance minister respond to calls for deeper tax cuts?

Aurangzeb told the committee that the government had already reduced taxes on lower-income salaried individuals in the previous budget and had extended relief wherever possible in the current one. He pointed out that the tax rate for individuals earning PKR 2.2 million annually had already been cut from 15% to 11% in the last budget, with relief measures extended across all salary brackets above that threshold. He said further reductions would be considered if fiscal space improved in the coming year.

Finance Secretary Imdadullah Bosal supported the minister's position, saying the government currently had little room to offer additional concessions. Aurangzeb also said the government was moving to abolish the super tax on exporters. He added that public feedback on the revised taxation framework had generally been positive.

What new taxes are proposed for real estate transactions in Pakistan?

The committee also reviewed proposals to tighten tax compliance in the property sector, targeting non-filers and taxpayers on the Active Taxpayers List who fail to submit returns. Under proposed amendments to Section 236C of the Income Tax Ordinance, withholding taxes on property transactions by non-filers would rise to 7.5% on transactions up to PKR 50 million, 8.5% on transactions between PKR 50 million and PKR 100 million, and 9.5% on transactions exceeding PKR 100 million.

Officials said the measures are intended to broaden the tax base, improve economic documentation, and increase revenue collection from the property market. The proposals also impose stricter tax treatment on individuals who remain on the Active Taxpayers List but miss the prescribed filing deadline, raising the cost of buying and selling property for such taxpayers. The changes are expected to increase pressure on non-filers and high-value property buyers to comply with filing requirements.