Section 137 of the Income Tax Ordinance, 2001, clarifies when taxpayers must pay income tax, including minimum tax, and outlines provisions for extensions and instalments.
ISLAMABAD: The Federal Board of Revenue (FBR) has clarified that the due date for filing an income tax return is also the deadline for paying the tax due on taxable income for the relevant tax year.
The clarification is contained in Section 137 of the Income Tax Ordinance, 2001, updated up to June 30, 2026, for Tax Year 2027, covering the period from July 1, 2026, to June 30, 2027.
Under Section 137(1), tax payable on a taxpayer’s taxable income, including minimum tax under sections 113 and 113A, becomes due on the date prescribed for furnishing the income tax return for that tax year.
The provision links the payment obligation to the applicable return filing deadline, requiring taxpayers to settle their tax liabilities by the relevant due date.
Tax payable under assessment orders
Section 137(2) separately addresses tax liabilities arising from an assessment order, an amended assessment order or another order issued by the Commissioner under the Ordinance.
In such cases, the taxpayer must be served with a notice in the prescribed form specifying the amount payable. The tax must then be paid within 30 days from the date the notice is served.
The law also provides a specific rule for tax payable under section 147(7), linking its payment deadline to the dates prescribed under the relevant provisions of section 147.
Extension and instalment facility
Under Section 137(4), taxpayers may submit a written application to the Commissioner seeking additional time to pay tax due under subsection (2) or permission to pay the amount in instalments.
The Commissioner may grant an extension or approve instalments of equal or varying amounts where the taxpayer demonstrates good cause. The decision is made after considering the circumstances of the case.
However, taxpayers permitted to pay in instalments must comply with the approved schedule. Under Section 137(5), failure to pay any instalment makes the entire outstanding balance immediately payable.
Default surcharge remains applicable
The Ordinance also makes clear that an extension of time or permission to pay tax in instalments does not remove liability for default surcharge under section 205.
Section 137(6) specifies that the surcharge liability continues to arise from the original due date of the tax under subsection (2), despite the concession granted by the Commissioner.
The provisions distinguish between tax payable by the return filing deadline and liabilities arising from assessment orders, while setting out the conditions under which additional time or instalment payments may be allowed.
Taxpayers should therefore observe the applicable return filing and payment deadlines and seek any permitted relief through the prescribed procedure to avoid additional liabilities.