Section 147A of the Income Tax Ordinance, 2001 requires eligible provincial sales tax registered persons to pay adjustable advance tax monthly, subject to an exclusion for persons on the Active Taxpayer List on June 30, 2026.
The Federal Board of Revenue (FBR) has prescribed an adjustable advance tax of 3 per cent of declared turnover for eligible provincial sales tax registered persons during Tax Year 2027.
Under Section 147A of the Income Tax Ordinance, 2001, updated up to June 30, 2026, the advance tax applies during the tax year running from July 1, 2026, to June 30, 2027.
Section 147A(1) states that every provincial sales tax registered person covered by the provision is liable to pay adjustable advance tax at the rate of 3 per cent of the turnover declared before the relevant provincial revenue authority.
Monthly advance tax payment
Under Section 147A(2), the advance tax must be paid monthly when the taxpayer files a sales tax return with the provincial revenue authority.
The provision links the payment obligation to the provincial sales tax return filing schedule, requiring eligible taxpayers to calculate the applicable advance tax on their declared turnover.
Section 147A(3) further provides that advance tax paid under this section may be taken into account when calculating advance tax payable under Section 147 of the Ordinance.
Exemption for Active Taxpayer List members
Section 147A(8) excludes a person whose name appeared on the Active Taxpayer List (ATL) on June 30 of the previous tax year.
For Tax Year 2027, this means the relevant date is June 30, 2026. Persons whose names appeared on the ATL on that date fall within the stated exclusion.
Eligible taxpayers should therefore verify their ATL status for the specified date before determining whether the Section 147A advance tax obligation applies to them.
Tax credit and refund provisions
The Ordinance provides a mechanism for adjusting the advance tax against a taxpayer’s final income tax liability.
Under Section 147A(5), a taxpayer who pays advance tax under this section is entitled to a tax credit when calculating tax due on taxable income for the relevant year.
Section 147A(6) provides that the credit must be applied in accordance with Section 4(3) of the Ordinance.
Where the credit, or part of it, cannot be utilised under the relevant provision for that tax year, Section 147A(7) allows the uncredited amount to be refunded in accordance with Section 170.
Section 147A(4) also provides that the Ordinance’s provisions apply to advance tax due under this section as if the amount were tax due under an assessment order.
The requirements form part of the FBR’s advance tax framework for Tax Year 2027. Provincial sales tax registered persons should assess their eligibility, declared turnover and applicable tax credits in light of the statutory provisions.