Advance Tax Under Section 147

Advance Tax Under Section 147

Advance tax under section 147 will be payable by every person whose income is taxable except following

  • income chargeable to tax under

Section 5  Dividend income:

  Section 6  Income of Non resident Person:

  Section 7  Air transport and shipping income of non resident person:

  • income subject to deduction of tax at source under Salary Income (149).
  • Income covered under Section 168(3) (PTR)

Credit for tax collected or deducted:

No tax credit shall be allowed for any tax collected or deducted that is a final tax under

(a) sub-section (7) of section 148; (Imports)

(b) sub-section (3) of section 151; (Profit on Debt)

(c) sub-section (1B) and (1BB) of section 152; (Payment to non-residents)

(d) sub-section (3) of section 153; contracts

(e) sub-section (4) of section 154; (Exports)

(f) sub-section (3) of section 156; (Winning of Prize)

(g) sub-section (2) of section 156A; (Petroleum)

(h) sub-section (3) of section 233;1[and] (Commission)

(j) sub-section (3) of section 234A.] (CNG Stations)

Exemptions : Payment of Advance Tax

This section does not apply to an individual where the individual’s latest assessed taxable income excluding income referred to above is less than one million rupees.

Advance Tax: Time of Payment

Advance tax is payable by an individual  to the Commissioner—

(a) in respect of the September quarter, on or before the 15th day of September;

(b) in respect of the December quarter, on or before the 15th day of December;

(c) in respect of the March quarter, on or before the 15th day of March; and

(d) in respect of the June quarter, on or before the 15th day of June

Advance tax shall be payable by an association of persons or a company to the Commissioner —

(a) in respect of the September quarter, on or before the 25th day of September;

(b) in respect of the December quarter, on or before the 25th day of December;

(c) in respect of the March quarter, on or before the 25th day of March; and

(d) in respect of the June quarter, on or before the 15th day of June.

Advance Tax: Compulsion not Option

  • Advance tax is always in relation to expected tax liability and not anything which has no nexus what so ever with one’s admitted liability for the relevant tax year.
  • Now a taxpayer who knows that he is going to meet heavy losses has no option but to pay advance tax on the basis of turnover.
  • The obligation to pay advance tax now arises where some income was charged to tax in the latest tax year or assessment year under the repealed Ordinance and not otherwise.
  • Consequential amendment has also been made in sub-section (4) for calculating advance tax liability on the basis of turnover of the latest assessment year under the repealed Ordinance or the latest tax year as the case may be

What about Excess Advance Tax?

A tax credit or part of a tax credit allowed under this section for a tax year that is not able to be credited under sub-section (3) of section 4 for the year shall be refunded to the taxpayer in accordance with section 170.

Downward Estimation: Advance tax under section 147

If a taxpayer consider that his ultimate tax liability u/s 147 would be less than actual estimate at the start of tax year

Then the taxpayer is allowed to file a revised (downward) estimate before last installment is due (4th installment).

And accordingly will pay adjusted amount in downward direction.

Upward Estimation: Advance tax under section 147

If a taxpayer consider that his ultimate tax liability u/s 147 would be more than actual estimate at the start of tax year

Then the taxpayer is required to file a revised (downward) estimate before the second installment is due (2nd installment).

And accordingly will pay adjusted amount in upward direction.

Advance tax for Non-Filer and Sales tax registered persons

Every provincial sales tax registered person shall be liable to pay adjustable advance tax at the rate of three per cent of the turnover declared before the provincial revenue authority.

The advance tax under sub-section (1) shall be paid monthly at the time when sales tax return is to be filed with the provincial revenue authority.

Advance tax paid under this section may be taken into account while working out advance tax payable under section 147.

Default surcharge for delay or failure to pay advance tax section 205(1A) & (1B)

Where a person who was required to pay advance tax under section 117(1) commits any of the following defaults:

(a)fails to pay any installment; or

(b)fails to pay any installment on or before the specified date: or

(c)fails to pay the full amount payable by him;

(d)tax paid u/s 117(1A) or 117(6) is less than 90% of tax payable for the relevant tax year;

He becomes liable to pay default surcharge at the rate of 12%.

Such default surcharge is calculated from due date of payment to the date on which it is actually paid.

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