Karachi, April 9, 2026 – The Regional Tax Office (RTO) II Karachi, operating under the Federal Board of Revenue (FBR), has recorded a significant increase in salary-based withholding tax collection, reaching Rs154 billion during the fiscal year 2024–25. This marks a strong 44% growth compared to the Rs107 billion collected in the previous fiscal year, highlighting improved tax compliance and expanded revenue efforts.
The collection under this category is governed by Section 149 of the Income Tax Ordinance, 2001, which requires employers to deduct tax from employee salaries at source. The steady rise in collections reflects both administrative improvements and a broader tax net within Karachi’s large and diverse workforce.
A breakdown of the figures shows that federal government employees contributed Rs13.85 billion in withholding tax, compared to Rs9.85 billion in the prior year, representing a 40% increase. Meanwhile, withholding tax collected from Sindh government employees under RTO-II jurisdiction rose sharply by 65%, reaching Rs9.52 billion, up from Rs5.78 billion last year.
The private sector remained the largest contributor to salary income tax, with employees paying Rs131 billion during the fiscal year. This represents a substantial 43% increase compared to Rs91.47 billion collected in the previous year, underscoring growing compliance among private sector employees and enhanced monitoring by tax authorities.
Officials attribute the overall increase to stricter enforcement measures, improved documentation, and increased awareness among taxpayers. The use of digital systems and data integration has also played a crucial role in tracking income sources and ensuring accurate tax deductions.
Tax experts suggest that continued reforms and automation within the FBR could further enhance revenue collection in the coming years, supporting Pakistan’s fiscal stability and reducing reliance on indirect taxation.