Pakistan’s salaried workers paid Rs. 91 billion in income tax during the first two months of FY27 — 225% more than the Rs. 28 billion collected from the entire real estate sector over the same period, according to FBR data. The gap isn’t just persisting; it’s widening, and this year’s budget is a big part of why.
The Numbers Behind the Gap
| Sector | Jul–Aug FY27 | Jul–Aug FY26 | Change |
|---|---|---|---|
| Salaried class (income tax) | Rs. 91 billion | Rs. 84.7 billion | +7.5% (Rs. 6.3 billion) |
| Real estate sector (income tax) | Rs. 28 billion | Rs. 39.4 billion | -28% |
Within the real estate figures, the breakdown is just as telling: advance tax collected on property sales fell to Rs. 18.4 billion from Rs. 27 billion (down 32%), while tax on property purchases dropped to Rs. 9.7 billion from Rs. 12.4 billion.
Why the Property Sector’s Tax Bill Shrank
This wasn’t a market slowdown — it was a deliberate policy choice. The government cut advance taxes on property transactions by roughly half in this year’s federal budget:
- Tax rate on property sales: cut to 2.75% from 5.5%
- Tax rate on property purchases: cut to 1.25% from 2.5%
These changes, aimed at stimulating the construction sector, took effect from Tax Year 2027 (starting July 1, 2026) — which lines up exactly with the period showing the sharp drop in real estate tax collection.
Not a New Pattern — Just a Widening One
This gap has been building for months, and the trend line makes that clear:
| Period | Salaried Class Tax | Property Sector Tax | Gap |
|---|---|---|---|
| Full FY26 (Jul 2025–Jun 2026) | Rs. 630 billion | Rs. 278 billion | +127% |
| First 2 months of FY27 | Rs. 91 billion | Rs. 28 billion | +225% |
In other words, even as the salaried class’s contribution grew only modestly year-on-year, the gap between the two sectors nearly doubled in percentage terms within just the first two months of the new fiscal year — almost entirely because the property sector’s contribution collapsed, not because salaried workers paid dramatically more.
The Bigger Picture: One Sector Can’t Hide, the Other Gets Relief
The core structural issue here isn’t new: salaried income in Pakistan is withheld directly by employers before it ever reaches an employee’s bank account, making it the most fully documented, unavoidable income stream in the tax system. Real estate, by contrast, has more room for under-documentation and has now also received direct rate cuts — a combination that tax analysts have flagged as placing a disproportionate share of Pakistan’s direct tax burden on people with the least ability to avoid it.
Earlier this year, a separate comparison found that salaried workers paid more in income tax than exporters, retailers, and the property sector combined during a seven-month stretch — underlining that this isn’t just a property-sector-specific gap, but a broader pattern across several harder-to-tax sectors.
Some Relief, But Not Enough to Close the Gap
Salaried taxpayers did receive some relief in the FY27 budget — reduced income tax slabs across nearly every bracket, and removal of the surcharge on high earners, marking the third consecutive year of slab relief. But that relief has been framed by analysts as compensating for salaried workers being overtaxed relative to their actual share of national income, rather than reducing the overall tax burden on the sector. The property sector’s relief, by comparison, was a direct rate cut of roughly 50% — a much larger and more immediate reduction.
Why This Matters for Pakistan’s Tax Policy Going Forward
This data lands at a sensitive moment: Pakistan is preparing for another IMF review mission this month, with the Fund’s biannual assessment expected to look closely at revenue performance and equity in the tax system. Whether the newly established Tax Policy Office at the Finance Ministry can push for a more balanced approach — without derailing the FBR’s Rs. 15.267 trillion revenue target for the year — remains an open question heading into that review.
Final Thoughts
A 225% gap between what salaried workers and the real estate sector pay in income tax isn’t just a striking statistic — it’s a direct, traceable result of a deliberate policy decision to cut property transaction taxes in half this year. With the salaried class’s contribution rising only modestly while the property sector’s collection fell by nearly a third, the numbers point to a tax system where the most easily taxed group continues to shoulder a growing share of the burden, even as harder-to-tax sectors receive direct relief.
