Section 147 of the Income Tax Ordinance, 2001 sets quarterly advance tax deadlines for individuals, companies and associations of persons, with separate payment dates and rules for estimating tax liability.
The Federal Board of Revenue (FBR) has outlined the advance tax payment requirements and deadlines applicable during Tax Year 2027 under Section 147 of the Income Tax Ordinance, 2001.
The FBR issued the Ordinance updated up to June 30, 2026, for Tax Year 2027, which runs from July 1, 2026, to June 30, 2027.
Under Section 147, taxpayers who meet the prescribed conditions are required to pay advance tax in quarterly instalments based on their assessed tax liability or estimated turnover, depending on their taxpayer category.
Advance tax payment deadlines for Tax Year 2027
Section 147 specifies different deadlines for individuals and companies or associations of persons (AOPs).
| Quarter | Individuals | Companies and AOPs |
| September quarter | September 15, 2026 | September 25, 2026 |
| December quarter | December 15, 2026 | December 25, 2026 |
| March quarter | March 15, 2027 | March 25, 2027 |
| June quarter | June 15, 2027 | June 15, 2027 |
These are the statutory dates specified under subsections (5) and (5A) of Section 147. The December 25 deadline for companies and AOPs falls on a public holiday in Pakistan, so taxpayers should verify any applicable official payment arrangements or notifications.
Who is required to pay advance tax?
Under Section 147(1), taxpayers whose income was charged to tax in the latest tax year or assessment year are generally liable to pay advance tax, subject to specified exclusions.
The provision excludes certain categories of income, including income chargeable under sections 5, 6 and 7, salary income subject to tax deduction under section 149, and certain income subject to withholding or collection for which no tax credit is allowed under section 168(3).
Section 147(2) further provides that an individual is not required to pay advance tax under this section if their latest assessed taxable income, after excluding the income specified in the relevant provisions, is below Rs1 million.
Advance tax calculation for individuals
Under Section 147(4B), an individual whose latest assessed taxable income meets the Rs1 million threshold is required to calculate quarterly advance tax using the following formula:
Advance tax = (A ÷ 4) − B
Where:
• A is the tax assessed for the latest tax year or assessment year under the repealed Ordinance.
• B is the tax paid during the relevant quarter for which a credit is allowed under section 168, excluding tax deducted under section 149.
The explanation to this subsection clarifies that the assessed tax includes the liability under section 4C.
Advance tax calculation for companies and AOPs
Under Section 147(4), companies and AOPs calculate quarterly advance tax using the following formula:
Advance tax = (A × B ÷ C) − D
Where:
• A is the taxpayer’s turnover for the relevant quarter.
• B is the tax assessed for the latest tax year.
• C is the turnover for the latest tax year for which a return has been filed.
• D is the tax paid during the quarter for which a tax credit is allowed under section 168.
If a taxpayer does not provide quarterly turnover, or the turnover is unknown, the law provides that it is taken as one-fourth of 120 per cent of the turnover for the latest tax year for which a return has been filed.
The assessed tax includes liabilities under sections 4C, 113 and 113C, as clarified by the relevant provisions.
Revised advance tax estimates
Section 147(4A) requires companies and AOPs, including banking companies, to estimate their tax payable for the relevant tax year before the second instalment falls due.
Where the estimated tax liability is higher than the amount calculated under the standard quarterly formula, the taxpayer must submit an estimate to the Commissioner by the second-quarter deadline.
The taxpayer must then pay 50 per cent of the estimated liability by that deadline, after adjusting for qualifying payments already made. The remaining 50 per cent is payable in two equal instalments by the third- and fourth-quarter deadlines.
Section 147(6) also allows taxpayers to submit a revised estimate where they expect their tax liability for the year to be lower than the amount otherwise payable.
Such an estimate must include turnover for completed quarters, estimated turnover for the remaining quarters, reasons for any anticipated decline, supporting evidence of expenses or deductions, and the calculation of estimated taxable income.
Under section 147(6B), the Commissioner may reject an estimate that lacks the required supporting details or documentary evidence, but only after providing the taxpayer an opportunity to be heard.
Advance tax on capital gains from securities
Section 147(5B) provides for adjustable advance tax on capital gains from securities, based on the holding period.
| Holding period | Advance tax rate |
| Less than six months | 2% of quarterly capital gains |
| More than six months but less than 12 months | 1.5% of quarterly capital gains |
The advance tax is payable within 21 days after the end of each quarter. The provision states that these rules do not apply to individual investors.
Advance tax on property development projects
Under Section 147(5C), persons engaged in constructing and disposing of residential, commercial or other buildings, or developing and selling residential, commercial or other plots, must pay adjustable advance tax on a project-by-project basis.
The tax is calculated at the rates specified in Part IIB of the First Schedule and is payable in four equal instalments according to the applicable deadlines under subsections (5) and (5A).
Tax credit for advance tax payments
Section 147(8) allows taxpayers to claim a tax credit for advance tax paid when calculating their final tax liability for the relevant year.
Under subsections (9) and (10), the credit is applied in accordance with section 4(3). Any credit that cannot be utilised for the year may be refunded under section 170.
Section 147(7) also provides that the Ordinance applies to advance tax due under this section as if the amount were tax payable under an assessment order.
Taxpayers should review their applicable category, estimated annual liability and qualifying tax credits before making payments, and consult the latest FBR notifications where any deadline or payment procedure is subject to change.