ISLAMABAD: The Federal Board of Revenue (FBR) witnessed a substantial increase in tax collection from salary income during tax year 2020, marking a sharp growth of 69 percent compared to the previous year. This significant rise is largely attributed to revisions in the income tax slabs for salaried individuals introduced under fiscal reforms.
According to FBR data, the total tax collection on salary income surged to Rs129.43 billion in tax year 2020, up from Rs76.5 billion collected during the preceding tax year. The revised tax structure for salaried individuals played a key role in broadening the income base and enhancing voluntary compliance.
A major contributor to this overall growth was the tax collection from the salary of federal government employees. The revenue generated from this segment recorded an unprecedented jump of 118 percent, reaching Rs13 billion in tax year 2020, as compared to Rs5.97 billion in the previous year. This reflects improved compliance and better enforcement within government payroll systems.
Similarly, salary earners working for government entities other than the federal government also saw their tax collection rise dramatically. The amount collected from these employees increased by an impressive 131 percent, reaching Rs18.12 billion in tax year 2020, up from Rs7.83 billion in the previous year.
The private sector, which constitutes a significant portion of the country’s workforce, also experienced a strong upward trend. The tax collection from private salary income grew by 57 percent, reaching Rs98.25 billion in tax year 2020, as compared with Rs62.6 billion in the preceding year.
The sharp rise in tax collection across all segments of salaried taxpayers reflects both structural tax reforms and improved documentation of income. These developments suggest enhanced capacity of the FBR to tap into formal salary streams, bringing more individuals into the tax net and contributing to national revenue through documented income sources.