Question 1

Does advance tax apply to salaried individuals?

Accepted Answer

For most salaried individuals, the employer deducts income tax monthly under Section 149. These deductions serve as advance tax. Most salaried employees with only salary income do not need separate quarterly payments. However, a salaried person with additional non-salary income — and a prior year assessed income above PKR 1,000,000 — must pay separate advance tax on that extra income.

Question 2

What is the minimum income threshold for advance tax?

Accepted Answer

Individuals with latest assessed taxable income below PKR 1,000,000 — after excluding income covered by withholding at source — are exempt from advance tax. This threshold does not apply to companies or AOPs.

Question 3

Can I pay less advance tax than the formula requires?

Accepted Answer

Yes. If you expect your actual tax liability to be lower than the formula-based amount, you can file a revised downward estimate with the Commissioner under sub-section (6), supported by documentary evidence required under sub-section (6B). If your estimate falls short, you will owe surcharge on the shortfall.

Question 4

What if I have never filed a tax return before?

Accepted Answer

New filers have no prior year tax to base advance tax on. In your first year of filing, you generally do not owe advance tax. From the second year onward, once FBR assesses your income from your return, the advance tax obligation applies if your assessed income meets the threshold.