Section 147 Advance Tax Calculator — Pakistan
Calculate advance tax payable under Section 147 of the Income Tax Ordinance, 2001. This calculator helps taxpayers estimate advance tax payable under Section 147 based on the applicable taxpayer category, latest assessed tax, turnover and eligible tax credits. For educational and estimation purposes only.
Select Taxpayer Type
Eligibility & Threshold
Company — Quarterly Advance Tax
Optional — Sections 4C, 113 & 113C
Capital Gains from Sale of Securities — Section 147(5B)
Builder / Developer — Section 147(5C)
Section 147(5C) applies to every person deriving income from the business of:
- construction and disposal of residential, commercial or other buildings; or
- development and sale of residential, commercial or other plots, for itself or otherwise.
Select Quarter
Quarterly Payment Schedule
| Quarter | Period | Due Date |
|---|
What is Section 147 Advance Tax?
Advance tax under Section 147 of the Income Tax Ordinance, 2001 is income tax paid during the tax year in four quarterly instalments, rather than as a single payment when the return is filed. It is not an additional tax: under Section 147(8) a taxpayer who has paid advance tax is allowed a tax credit for it in computing the tax due on taxable income for that year, and under Section 147(10) any credit that cannot be applied is refunded.
Who Has to Pay Advance Tax?
Every taxpayer whose income was charged to tax for the latest tax year is liable, other than in respect of the income excluded by Section 147(1):
- income chargeable to tax under Sections 5, 6 and 7 — clause (b);
- income subject to deduction of tax at source under Section 149 (salary) — clause (c);
- income from which tax has been collected under Division II or deducted under Division III, or deducted or collected under Chapter XII, and for which no tax credit is allowed as a result of Section 168(3) — clause (d).
Under Section 147(2), the section does not apply to an individual where the individual's latest assessed taxable income — excluding the income referred to in clauses (b), (c) and (d) — is less than Rs. 1,000,000. Companies and associations of persons are liable irrespective of any such threshold.
Section 147 Formula for Individuals
B — tax paid in the quarter for which a tax credit is allowed under Section 168, other than tax deducted under Section 149.
This formula applies where the individual has latest assessed income of Rs. 1,000,000 or more as determined under Section 147(2).
Section 147 Formula for Companies and AOPs
B — the tax assessed to the taxpayer for the latest tax year. Tax assessed includes tax under Sections 4C, 113 and 113C.
C — the taxpayer's turnover for the latest tax year.
D — the tax paid in the quarter for which a tax credit is allowed under Section 168.
Where the taxpayer fails to provide turnover, or the turnover for the quarter is not known, it is taken to be one-fourth of one hundred and twenty percent of the turnover of the latest tax year for which a return has been filed. Under Section 147(4AA), tax liability under Sections 4C, 113 and 113C is also taken into account when working out advance tax.
Under Section 147(6A), a company or an association of persons must pay advance tax even in the absence of last assessed income or declared turnover — estimating the amount on the basis of quarterly turnover, taking into account tax payable under Sections 113 and 113C, and adjusting for amounts already paid.
Section 147 Quarterly Due Dates
| Quarter | Individual — s.147(5) | Company / AOP — s.147(5A) |
|---|---|---|
| September | 15 September | 25 September |
| December | 15 December | 25 December |
| March | 15 March | 25 March |
| June | 15 June | 15 June |
Advance Tax on Capital Gains from Securities
Section 147(5B) charges adjustable advance tax on capital gain from the sale of securities:
| Holding Period | Rate of Advance Tax |
|---|---|
| Less than six months | 2% of the capital gains derived during the quarter |
| More than six but less than twelve months | 1.5% of the capital gains derived during the quarter |
Such advance tax is payable to the Commissioner within twenty-one days after the close of each quarter. The provisions of this sub-section are not applicable to individual investors.
Advance Tax for Builders and Developers
Under Section 147(5C), every person deriving income from the construction and disposal of residential, commercial or other buildings, or the development and sale of plots, is liable to pay adjustable advance tax on a project-by-project basis, as prescribed, at the rates specified in Part IIB of the First Schedule, in four equal instalments, payable in accordance with sub-sections (5) and (5A).
How Advance Tax is Adjusted in the Income Tax Return?
A taxpayer who has paid advance tax for a tax year is allowed a tax credit for that tax in computing the tax due on taxable income for that year (Section 147(8)). The credit is applied in accordance with Section 4(3) (Section 147(9)), and any credit or part of a credit that cannot be applied is refunded to the taxpayer (Section 147(10)). Under Section 147(7), advance tax due is treated as if it were tax due under an assessment order.
Paying less than the formula amount
Under Section 147(6), a taxpayer who estimates before the last instalment is due that the tax payable for the year is likely to be less than the formula amount may furnish an estimate and pay accordingly. The estimate must contain turnover for the completed quarters, estimated turnover for the remaining quarters with reasons for any decline, documentary evidence of estimated expenses or deductions, evidence of tax payments and credits, and a computation of estimated taxable income. Under Section 147(6B) the Commissioner may reject an inadequate estimate after providing an opportunity of being heard.
Paying more than the formula amount
Under Section 147(4A), any taxpayer required to pay under sub-section (4) — including a banking company — must estimate the tax payable for the year before the second instalment is due. Where the tax payable is likely to exceed the formula amount, the taxpayer furnishes the estimate on or before the due date of the second quarter, pays fifty per cent of that amount by that date after adjusting amounts already paid, and pays the remaining fifty per cent in two equal instalments by the due dates of the third and fourth quarters.
Frequently Asked Questions
1. What is advance tax under Section 147?
It is income tax paid in four quarterly instalments during the tax year rather than a single payment at filing. It is fully adjustable against the final liability, and any excess is refunded.
2. Who has to pay advance tax?
Companies and AOPs pay quarterly regardless of income level. Individuals pay only where latest assessed taxable income, excluding the income in Section 147(1)(b), (c) and (d), is Rs. 1,000,000 or more.
3. Is advance tax payable on salary?
No. Income subject to deduction under Section 149 is excluded by Section 147(1)(c). For individuals, tax deducted under Section 149 is also excluded from component B of the formula.
4. Is advance tax payable on final tax income?
Income from which tax has been collected or deducted and for which no tax credit is allowed as a result of Section 168(3) is excluded under Section 147(1)(d).
5. What is the individual formula?
(A ÷ 4) − B, where A is tax assessed for the latest tax year and B is tax paid in the quarter creditable under Section 168, other than tax deducted under Section 149.
6. What is the company and AOP formula?
(A × B ÷ C) − D, where A is the quarter's turnover, B is tax assessed for the latest tax year, C is turnover for the latest tax year and D is tax paid in the quarter creditable under Section 168.
7. What if the quarter's turnover is not known?
It is taken to be one-fourth of one hundred and twenty percent of the turnover of the latest tax year for which a return has been filed.
8. Does a new company with no assessment history pay advance tax?
Yes. Under Section 147(6A), advance tax is payable in the absence of last assessed income or declared turnover. The taxpayer estimates the amount on the basis of quarterly turnover, accounts for liability under Sections 113 and 113C, and adjusts amounts already paid.
9. Is advance tax charged on capital gains from securities?
Yes, under Section 147(5B) — 2% where the holding period is less than six months and 1.5% where it is more than six but less than twelve months, payable within twenty-one days after the close of each quarter. It does not apply to individual investors.
10. What happens if advance tax is not paid?
Under Section 147(7) the provisions of the Ordinance apply to advance tax due as if the amount were tax due under an assessment order, so the normal recovery machinery applies, along with default surcharge on the shortfall for the period of default.