According to Section 147 of the Income Tax Ordinance, 2001, “every taxpayer whose income was charged to tax for the latest tax year under this Ordinance or latest assessment year under the repealed Ordinance other than –
Where the taxpayer is an association of persons or a company, the amount of advance tax due for a quarter shall be computed according to the following formula, namely:-
(A x B/C) –D
Where –
A is the taxpayer’s turnover for the quarter
[Provided that where the taxpayer fails to provide
turnover or the turnover for the quarter is not known, it
shall be taken to be one-fourth of one hundred and twenty
percent of the turnover of the latest tax year for which a
return has been filed;]
B is the tax assessed to the taxpayer for the latest tax year
[“Explanation.- For removal of doubt it is clarified
that tax assessed includes tax under sections 113 and
113C.”]
C is the taxpayer’s turnover for the latest tax year; and
D is the tax paid in the quarter for which a tax credit is
allowed under section 168
Example
For example if turnover of a taxpayer for a quarter is Rs.300,000, tax assessed for the latest tax year Rs. 100,0000, turnover for latest tax year is Rs.1,000,000, tax paid in the quarter for which tax credit is allowed Rs. 20,000. Advance tax under Section 147 of the Income Tax Ordinance 2001 for the quarter will be calculated as under:
A= Rs.300,000
B= Rs. 100,000
C= Rs. 1,000,000
D= Rs. 20,000
=(300000*100000/1000000)-20000 = 30,000-20,000
Advance Tax Payable for Quarter = Rs. 10,000
In case of individual liable to pay advance tax, the tax payable for the quarter will be calculated as under:
(A/4)-B
where A= the tax assessed to the taxpayer for the latest tax year
B= the tax paid in the quarter for which a tax credit is allowed under section168, other than tax deducted under section 149 (Salary income)
For instance tax assessed to the taxpayer (individual) for the latest tax year (2022) is Rs. 100,000 and tax paid in the first quarter of 2023 for which a tax credit is allowed under Section 168, is Rs. 10,000. The advance tax payable by the individual for first quarter is as given below:
A= Rs. 100,000
B= Rs. 10,000
Advance taxpayable = (100000/4)-10000 = 25000-10000= Rs. 15000
According to Section 147A of the Income Tax Ordinance, 2001, “Every
provincial sales tax registered person shall be liable to pay advance tax
According to Section 148 of the Income Tax Ordinance, 2001, “The Collector of Customs shall collect advance tax from every importer of goods on the value of the goods at the rate specified in Part II of the First Schedule in respect of goods classified in Parts I to III of the Twelfth Schedule”.
“Advance tax shall be collected in the same manner and at the same time as the customs-duty payable in respect of the import or, if the goods are exempt from customs-duty, at the time customs-duty would be payable if the goods were dutiable”.
The Customs-duty is paid on bill of entry.
Transitional Advance Tax is paid on certain transactions/payments made by a taxpayer under Chapter Twelve of the Income Tax Ordinance, 2001 at the rates specified in respective Division of Part IV of First Schedule of Income Tax Ordinance, 2001:
Description | Section | Rate |
| Motor Vehicles Registration | 231B | Division VII of Part IV of First Schedule |
| Brokerage and Commission | 233 | Division II of Part IV of First Schedule |
| Motor Vehicles Token | 234 | Division III of Part IV of First Schedule |
| Electricity Consumption | 235 | Division IV of Part IV of First Schedule |
| Telephone and Internet users | 236 | Division V of Part IV of First Schedule |
| Sale on Auction | 236A | Division VIII of Part IV of First Schedule |
| Sale or Transfer of Immovable Property | 236C | Division X of Part IV of First Schedule |
| Advance Tax on Foreign TV Plays and advertisements | 236CA | Division XA of Part IV of First Schedule |
| Sales to distributors, dealers and wholesalers | 236G | Division XIV of Part IV of First Schedule |
| Sales to retailers | 236H | Division XV of Part IV of First Schedule |
| Purchase or Transfer of Immovable Property | 236K | Division XVIII of Part IV of First Schedule |
| Persons remitting amounts abroad through credit or debit or prepaid cards | 236Y | Division XXVII of Part IV of First Schedule |
Q. What is advance income tax?
Ans. Advance Income Tax is paid on during the year through quarterly payments under Section 147 before declaration of income, on imports under Section 148, on certain transactions under Chapter Twelve of the Income Tax Ordinance, 2001.
Q. What is advance tax under Section 147?
Ans. Under Section 147 of the Income Tax Ordinance, 2001, advance tax is paid by a taxpayer for the current year through quarterly payments before the income is declared or assessed for current year on the basis of tax assessed in the previous year.
Q. What is advance tax rate under Section 236K of the Income Tax Ordinance, 2001?
Ans. Advance tax rate under Section 236K of the Income Tax Ordinance, 2001 is give in Division XVIII of Part IV of First Schedule.
Q. Is advance tax refundable?
Ans. Advance tax is refundable if there is no tax payable on income actually declared or less than advance tax paid.
Q. Who should pay advance tax in Pakistan?
Ans. Every taxpayer whose income was charged to tax for the latest tax year under this Ordinance or latest assessment year under the repealed Ordinance other than –
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