Advance tax in Pakistan under Section 147 of the Income Tax Ordinance 2001 is paid during the tax year against your expected final income-tax bill. For a standard quarterly instalment, the law uses the previous assessed tax, divides it by four, and subtracts eligible tax already paid for that quarter. I’ve spent the past 20+ years helping individuals, freelancers, and business owners across Pakistan file their taxes properly. Here’s how to read the formula, dates and records without mixing Section 147 instalments up with advance tax collected at source.
If you’re comparing Section 147 payments with tax withheld on purchases or services, see our guide to advance tax vs withholding tax. Need help checking your filing position? You can contact a tax adviser before a due date rather than guessing from a bank SMS.
Key takeaways
- Section 147 advance tax is a payment during the year, credited against the final liability.
- The basic quarterly formula is (A ÷ 4) − B, with statutory rules about what counts as B.
- Individuals and companies/AOPs have different September-to-March instalment dates; the fourth date is June 15.
- A lower estimate may be filed under Section 147(6); companies expecting higher tax have a separate estimate rule under Section 147(6A).
- Source: FBR income tax calendar and the Income Tax Ordinance, 2001, Section 147.
What is advance tax in Pakistan under Section 147?
Section 147 advance tax is income tax paid in instalments during a tax year, based on the latest assessed tax and adjusted for qualifying payments already made. It is not an extra tax on top of your final bill: Section 168 allows credit for advance tax when your yearly liability is worked out. The section also contains exemptions and conditions, so don’t assume every taxpayer must pay in the same way.
People also use “advance tax” for tax deducted when buying a vehicle, booking a ticket or making another transaction. That is tax collected at source, not the quarterly calculation explained here. The distinction matters when you review your return and credits.
Who has to pay Section 147 advance tax?
Section 147 generally applies where tax was charged to a taxpayer for the latest tax year, subject to the exemptions and conditions written into the Ordinance. The exact position depends on your taxpayer type and the tax already collected from you. A salary-only taxpayer whose tax was fully withheld may fall within a statutory exception, but check the current law and your facts before relying on it.
| Taxpayer / situation | Section 147 treatment to check | What to review |
|---|---|---|
| Individual | Quarterly instalments may apply, subject to statutory exemptions | Latest assessment and eligible quarterly credits |
| Association of persons (AOP) | Instalments apply under the AOP timetable when in scope | Latest assessed tax and payments for the quarter |
| Company | Instalments apply under the company timetable when in scope | Latest assessed tax; estimate rules if liability changes |
| Salary-only person | A specific exception may apply where tax is fully withheld | Whether withholding fully covers the relevant liability |
This is a guide, not an individual determination. Check the full Section 147 text for your tax year and circumstances.
How do you calculate advance tax under Section 147?
For a standard instalment, Section 147 uses this calculation: (A ÷ 4) − B. A is the tax assessed for the latest tax year, while B is qualifying tax paid for that quarter and creditable under Section 168. The statute excludes salary withholding under Section 149 and rent withholding under Section 155 from reducing this instalment, so don’t subtract every tax deduction shown on a certificate.
Worked example (illustration only)
Suppose the latest assessed tax, A, is Rs 400,000. Suppose eligible tax paid for the quarter, B, is Rs 40,000. The illustrative instalment is (Rs 400,000 ÷ 4) − Rs 40,000 = Rs 60,000. These are example amounts, not a rate, threshold or estimate of your liability.
- Find the latest assessed tax amount used by Section 147.
- Divide that amount by four.
- Identify the quarter’s payments that qualify under the law and Section 168.
- Do not subtract Section 149 salary or Section 155 rent withholding from this formula.
- Keep the assessment, challans and payment evidence with your tax-year records.
Your actual calculation can differ if the statute, assessment history or payment record differs. Confirm it before paying.
When are Section 147 instalments due?
The FBR calendar lists four instalment dates. Individuals have dates on the 15th of September, December, March and June. AOPs and companies have the 25th of September, December and March, followed by June 15. These are statutory calendar dates; confirm the applicable tax year and any official extension before acting.
| Taxpayer | First instalment | Second | Third | Fourth |
|---|---|---|---|---|
| Individual | 15 September | 15 December | 15 March | 15 June |
| AOP or company | 25 September | 25 December | 25 March | 15 June |
See the FBR income tax calendar and check the current official calendar for updates. Do not rely on an old social post or a reminder copied from another taxpayer.
Can you revise the estimate under Section 147?
Yes. Section 147(6) allows a taxpayer expecting lower tax for the current year to furnish an estimate to the Commissioner and pay on the reduced estimate in the remaining instalments. The provision requires supporting turnover evidence, and the Commissioner may reject an unsupported estimate. A company expecting higher liability has a separate obligation under Section 147(6A) to estimate and pay the additional amount before the last instalment falls due.
An estimate should follow your books, not a convenient guess. Retain the working and documents behind it, and check the current consolidated Ordinance before filing.
How is Section 147 different from withholding tax?
Section 147 is a quarterly payment mechanism calculated from assessed tax and eligible credits. Withholding tax is generally collected by a payer or intermediary at the point specified in the law. In everyday conversation, both may be called “advance tax,” but their collection method, calculation and return treatment are not interchangeable. Our separate advance tax and withholding tax comparison explains that boundary; this guide stays focused on Section 147.
What records should you keep?
Keep the assessment used for A, each instalment calculation, payment challans, bank confirmations and any estimate filed under Section 147(6) or (6A). Reconcile qualifying credits separately from salary or rent withholding because those amounts do not reduce the instalment formula described above. Clear records make it easier to explain a mismatch when preparing your annual return.
Common mistakes to avoid
- Treating every tax deducted at source as B in the Section 147 formula.
- Subtracting salary or rent withholding despite Sections 149 and 155 being excluded for this calculation.
- Using an old assessed amount without checking which tax year and assessment the law calls for.
- Assuming the same due dates apply to individuals, AOPs and companies.
- Filing a reduced estimate without evidence of turnover.
- Treating advance tax as an additional final tax rather than checking the Section 168 credit.
What should you do before paying?
Start with the relevant tax year, the latest assessed tax and your payment records. Confirm which credits qualify, use the correct taxpayer timetable, then compare the result with the current FBR calendar and Section 147. If your business income has changed sharply, ask a qualified tax professional to review any estimate before you submit it.
Related reads
- Ultimate guide to tax preparation
- Advance tax vs withholding tax
- File a small-business tax return in Pakistan
Frequently asked questions
What is advance tax under Section 147?
Section 147 advance tax is income tax paid in instalments during the year by taxpayers within the provision’s scope. The amount is worked out using the latest assessed tax and qualifying payments for the quarter. It is credited against the final liability under Section 168, so it is not automatically an extra tax.
How do you calculate advance tax in Pakistan?
The standard Section 147 quarterly formula is (A ÷ 4) − B. A is the tax assessed for the latest tax year; B is qualifying tax paid in that quarter and creditable under Section 168. Salary withholding under Section 149 and rent withholding under Section 155 are excluded from reducing this instalment.
What are the Section 147 due dates?
FBR’s calendar lists September 15, December 15, March 15 and June 15 for individuals. For AOPs and companies, the first three dates are September 25, December 25 and March 25, with the last instalment due June 15. Check the official calendar for the relevant tax year and any extension.
Is advance tax an extra tax?
Section 147 payments are credited against the annual tax liability under Section 168. They are payments made during the year, not automatically a separate tax in addition to the final bill. The final return reconciles the liability and eligible payments, so keep the assessment and payment evidence for each instalment.
Can a taxpayer pay less advance tax if income falls?
Section 147(6) permits a taxpayer expecting lower current-year tax to furnish an estimate and pay reduced instalments for the remaining quarters. Turnover evidence is required, and the Commissioner may reject an unsupported estimate. The taxpayer should document the calculation and verify the current statutory requirements before relying on this option.
Do salary deductions reduce my Section 147 instalment?
Salary withholding under Section 149 is excluded from the payment reduction in the Section 147 quarterly formula, as is rent withholding under Section 155. Do not subtract these amounts from A ÷ 4 when calculating B. Reconcile withholding separately in your annual tax computation and confirm the applicable law for your facts.
Need help with your tax calculation?
If your income, withholding or assessment has changed, get your records reviewed before the next instalment date. I can help you check the Section 147 calculation and the return position; contact our tax team for support with your Pakistan tax filing.
Conclusion
Use the latest assessed tax, apply only qualifying quarterly credits and check the due date for your taxpayer type. Before submitting a reduced or increased estimate, document the numbers and verify them against the current Section 147 text.
