What is Advance Tax Under Section 147?

Advance tax is income tax paid in quarterly installments during the tax year itself, rather than as a lump sum after the year ends. It applies to companies, AOPs, and individuals whose latest assessed tax liability crosses the prescribed threshold — ensuring FBR receives tax revenue throughout the year rather than only at filing time.

Who Must Pay Advance Tax?

  • All companies (Pvt Ltd, Public Ltd) regardless of tax liability amount
  • AOPs and individuals whose latest tax assessed exceeds Rs. 1,000,000
  • Businesses with consistent profitable operations from the prior tax year

Quarterly Payment Schedule

QuarterPeriodDue Date
1st QuarterJul – SepSeptember 25
2nd QuarterOct – DecDecember 25
3rd QuarterJan – MarMarch 25
4th QuarterApr – JunJune 15

How it's calculated: The formula uses your latest tax assessed (A), turnover for the quarter (B), turnover for the latest tax year (C), and tax already paid for earlier quarters (D): Advance Tax = (A×B/C) − D. This estimates your quarterly liability proportionate to actual quarterly turnover.

Adjustment Against Final Liability

Advance tax paid during the year is fully adjustable against your final assessed tax liability when you file your annual return. If advance tax paid exceeds the final liability, the excess becomes a refundable amount; if it falls short, you must pay the balance with your return.

Penalty for Non-Payment

Failure to pay advance tax on time attracts default surcharge under Section 205, calculated at KIBOR + 3% per annum on the unpaid amount, for the period of default. Persistent default can also trigger closer FBR scrutiny of the taxpayer's overall compliance.

Frequently Asked Questions

Who is required to pay advance tax under Section 147?
Companies, AOPs, and individuals with the latest assessed tax liability above Rs. 1,000,000 are required to pay advance tax in quarterly installments during the tax year, based on their estimated income for that year.
How is the quarterly advance tax amount calculated?
It is generally calculated using a formula based on the latest tax assessed for the taxpayer, turnover for the relevant quarter, and the applicable tax rate, then adjusted by tax already paid in earlier quarters of the same year.
What happens if I overpay or underpay advance tax?
Overpayment is adjusted against your final tax liability when you file your annual return and can be claimed as a refund if it still exceeds the final liability. Underpayment beyond the allowed margin can attract default surcharge under Section 205.

Need Help Calculating Advance Tax?

We calculate, file, and manage quarterly advance tax payments for businesses across Pakistan.