TAX COMPLIANCE SERVICE
Advance Tax in Pakistan
Every company, AOP, and eligible individual must pay advance tax quarterly under Section 147 of the Income Tax Ordinance 2001. Irshad & Co. computes, files, and reconciles your advance tax — so you stay compliant and penalty-free.
UNDERSTANDING ADVANCE TAX
What is Advance Tax Under Section 147?
Advance tax is a pay-as-you-earn mechanism under Section 147 of the Income Tax Ordinance 2001. Instead of settling the full tax bill after year-end filing, companies, AOPs, and individuals above the prescribed threshold estimate their annual liability and pay it in four quarterly instalments through the tax year.
Liability is triggered once your latest assessed tax exceeds Rs. 1,000,000, or turnover crosses the threshold set for business individuals and AOPs. Each instalment is computed under Section 147(4), based on the latest tax assessed and adjusted for known changes in current-year income.
Advance tax paid each quarter is later adjusted against your final assessed liability when the annual income tax return is filed — any shortfall or excess is settled at that stage.
4
Quarterly instalments required each tax year
147
Section of ITO 2001 governing advance tax
15th
Due date each quarter (month varies)
OUR SERVICE

What's Included in Our Advance Tax Service

🧮
Advance Tax Computation
We calculate your quarterly advance tax liability using the Section 147(4) formula, based on your latest assessed income and any material change for the current year.
📝
Quarterly Estimate Filing
Where income varies significantly, we prepare and file the revised estimate under Section 147(6) so your instalments reflect actual expected earnings.
💻
IRIS Submission
We generate your payment slip (PSID) and submit advance tax challans and estimates through FBR's IRIS portal before each quarterly deadline.
🔄
Adjustment Against Final Liability
At year-end, we reconcile all advance tax paid against your final assessed liability in the annual income tax return, ensuring accurate credit.
📩
Notice Handling
We respond to FBR notices regarding under-estimation, short payment, or discrepancies in your advance tax record on your behalf.
🗂️
Record-Keeping
We maintain organised records of all quarterly challans and computations, ready for audit or reference whenever required.
ELIGIBILITY

Who Must Pay Advance Tax?

🏢
Companies
All resident and non-resident companies with taxable income are required to pay advance tax in four quarterly instalments.
🤝
Association of Persons (AOPs)
AOPs whose latest tax assessed exceeds the prescribed limit must estimate and pay advance tax every quarter.
👤
Individuals Above Threshold
Business individuals whose last assessed tax exceeds Rs. 1,000,000 fall within the advance tax net under Section 147.
🌍
Non-Residents with a Permanent Establishment
Non-resident persons operating through a permanent establishment in Pakistan are liable for advance tax on Pakistan-source income.
🏭
Manufacturers & Commercial Importers
Manufacturers and commercial importers already subject to advance tax at the import stage adjust these payments against Section 147 liability.
💼
Professionals & Self-Employed
Doctors, lawyers, consultants, and other self-employed professionals whose assessed income crosses the threshold must also pay quarterly advance tax.
HOW IT WORKS

Our Advance Tax Filing Process

01
Income Review
We review your latest tax assessment and current-year projections to determine your advance tax base.
02
Quarterly Computation
We calculate each instalment using the Section 147(4) formula, factoring in known income changes.
03
IRIS Payment & Filing
We generate the PSID, process payment, and file the estimate on FBR's IRIS portal before the deadline.
04
Year-End Reconciliation
We reconcile total advance tax paid against your final liability when your annual return is filed.
FAQ

Frequently Asked Questions - Advance Tax

What is advance tax under Section 147?+

Advance tax is a mechanism under Section 147 of the Income Tax Ordinance 2001 requiring taxpayers to pay estimated tax quarterly, rather than as one lump sum after year-end assessment.

Who must pay advance tax in Pakistan?+

Companies, AOPs, and individuals whose latest assessed tax exceeds Rs. 1,000,000, along with non-residents with a permanent establishment in Pakistan, are required to pay advance tax.

What happens if advance tax is not paid?+

Non-payment attracts a default surcharge under Section 205, and FBR may issue a notice or initiate recovery proceedings against the outstanding instalment.

How is it adjusted against final tax liability?+

All advance tax paid during the year is credited against your final assessed tax liability when you file your annual income tax return; any excess is refundable or carried forward.

What's the penalty for underestimation?+

If your estimate understates the final tax liability by more than 10%, a default surcharge applies on the shortfall under Section 205A, calculated from the due date of each instalment.

Stay Ahead of Your Advance Tax Obligations

Let Irshad & Co. handle your quarterly advance tax computation, IRIS filing, and year-end reconciliation — accurate, on time, every quarter.

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