Payment of Advance Tax Section 147
Payment of Advance Tax Section 147: Finance Act, 2024 — Explanation regarding Important Amendments made in the Income Tax Ordinance, 2001
Important amendments made in Income Tax Ordinance, 2001 (“the Ordinance”) through Finance Act, 2024 are explained in the subsequent paragraphs.
Payment of Advance Tax Section 147
Advance tax for a company or an association of persons is computed as per formula contained in sub-section (4) of section 147 subject to computation of higher advance tax under sub-section (4A) and lower under sub-section (6) of section 147.
As per formula contained in sub-section (4), advance tax is computed by multiplying turnover for the quarter with ratio of tax assessed for the latest tax year with the turnover for the latest tax year.
The resultant amount can be reduced by the tax paid in the quarter for which credit is available under section 168. In cases where, turnover for the quarter is not known or the taxpayer fails to provide turnover for the quarter, one-fourth of one hundred and ten percent of the turnover of the latest tax year for which a return has been filed is taken.
Through the Finance Act, 2024, where turnover for the quarter is not known or not furnished by the taxpayer, it shall be taken to be one-fourth of one hundred and twenty percent of the turnover for the latest tax year for which return has been filed.
A new sub-section (6B) has been introduced in section 147 to provide that where a taxpayer has filed estimate under sub-section (6) that the tax payable by him is likely to be less than the amount he is required to pay, the taxpayer shall furnish estimate containing turnover for the completed quarters of the relevant tax year, estimated turnover for the remaining quarters, supporting evidence of expenses or deductions in computing income, evidence of tax payments and tax credits and computation of estimated taxable income.
Where the Commissioner is not satisfied with the documentary evidence provided or where an estimate of tax payable is not accompanied by details mentioned in the said sub-section, the Commissioner may reject the estimate after providing an opportunity of being heard and the taxpayer shall pay advance tax according to the formula contained in sub-section (4) or (4B), as the case may be.
Further, through Finance Act, 2024 a new non-obstante provision namely lib-section (6C) has been introduced in section 147 as per which the withholding agents specified in sub-sections (1), (3), (3B) and (3C) of section 154 shall, at the time of realization of foreign exchange proceeds, or realization of the proceeds on account of sale of goods or export of goods or at the time of making payment to an indirect exporter, or clearing of goods respectively, deduct or collect tax at the rate of one percent of such foreign exchange proceeds, or exports, or payment, in addition to tax collectible or deductible under section 154.
Hence, the withholding agents will collect two percent tax on export proceeds [one percent minimum tax under section 154 and one percent adjustable advance tax under sub-section (6C) of section 147.
Read full text of Explanation of Finance Act, 2024 Amendments made in the Income Tax Ordinance, 2001 for more updates on taxes from FBR click here.
