ISLAMABAD: The withholding tax collection from contracts continued to be the leading source of withholding tax, reaching PKR 728 billion during 2024-25, reflecting a 37 percent increase over the previous year’s PKR 531 billion.
This strong growth is attributed not only to inflationary pressures but also to the rise in public sector development, showing activities expanded in spending and contractual infrastructure services.
According to the FBR’s data for 2024-25, Withholding tax remained the largest contributor to income tax collection, amounting to Rs 3,371.9 billion during 2024-25 and registering growth of 23.1 percent. However, its share in direct taxes has been on a gradual decline, dropping from 59.8 percent in FY2024 to 58.2 percent in FY2025.
The salary was the second-largest source of withholding tax, recording the highest growth of 54.7 percent among the major WHT contributors in FY2025. This sharp increase was mainly driven by higher tax rates, rising salary levels, and the broader coverage of the tax net.
Withholding tax on bank interest and securities (u/s 151) was the third-largest contributor to WHT collection, though it registered a slight decline of 1.6 percent. The collection stood at PKR 475 billion in the current fiscal year compared to PKR 483 billion in the previous year. This decrease is mainly attributed to the reduction in interest rates.
Imports were the fourth-largest contributor to WHT, with collection rising by 10.9 percent in FY2025. This growth was supported by higher import volumes, stricter enforcement by the FBR, policy measures, and the impact of inflation.
Withholding tax collection on dividends in FY2025 registered a growth of 12.4 percent compared to the previous year.
Withholding tax collection from electricity consumption grew by 11.2 percent in FY2025, significantly lower than the 32 percent growth recorded in the previous year. This deceleration is mainly due to the base effect and the increasing shift toward solar energy and alternative power sources.
Other major WHT revenue sources also showed notable growth in FY2025, with collection under sections 154, 236, 236C, and 236K rising by 25.1 percent, 24.1 percent, 22.1 percent, and 14.0 percent, respectively.
Copyright Business Recorder, 2026
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