Federal Board of Revenue (FBR) Advance Tax Notice can be daunting for taxpayers in Pakistan. And that is exactly why if you own business and self-employ or employed on salary bases even the thought of handling an advance tax notice Pakistan obligation can feel enough to keep you up at night. But you can think of it as successfully managing your Advance Tax FBR and not being penalized for missing the mark. You can stay updated on this blog for how you and all others who are in receipt of an Advance Tax notice might respond easily and fully according to the Advance Tax Under Section 147.
Understanding the Advance Tax Notice
A resident taxpayer must receive an Advance Tax Notice which is e-issued through Iris by the FBR according to his estimate income tax at a minimum of 75% or more in case total income liability reach Rs. Advances Tax under Section 147: Under this section of Advances tax, the taxpayer which includes Individual/HUF, AOP and Company should pay their taxes through the year in form of 4 quarters other than paying at once at the end of the year. This mechanism, which is in place to assure consistent revenue collection by the government (in respect of persons having taxable income above PKR 1 million or an identified business turnover). The notice contains the total amount owed as well as payment dates and other conditions.
Ignoring an Advance Tax Notice Pakistan may lead to fines, interest or even legal trouble; hence action is required. To the extent you engage with the notice and have an orderly response to things, you can regularize your duties.
Step-by-Step Guide to Handling an Advance Tax Notice
Here’s how you can handle an Advance Tax Notice without losing your cool:
Review the Notice Thoroughly
The first step is to read the Advance Tax Notice Online that you receive on the Iris portal or in post/email. Check the following details:
Amount Payable: Check your advance tax claim.
Deadlines Start, by making a note of the payment schedule (usually September 25, December 25, March 25 and June 15 for companies; September 15, December 15, March 15 and June 15 for individuals).
Year of assessment: Make sure the notice corresponds with your most recent assessed income or turnover.
Match the amounts and check them against your own account records to assure every figure is correct. Errors in the notice can disagree and spotting those early on will save you from drifting into overpayment or squabbling.
Determine Your Liability
Under the section 147 Advance Tax Under Section 147 FBR computes your advance tax on the basis of your previous year’s / assessed tax or turnover. For individuals, the formula is:
Advance Tax = (Tax Assessed for Latest Year / 4) – Tax Paid in the Quarter. For companies or AOPs, it’s:
Advance Tax = ((A x B) ÷ C) – D where:
A = Turnover for the quarter
B = Assessed value for the latest year available for which a tax has been assessed.
C = Turnover most recent tax year
D = Membership premium payment in the quarter (for which a credit is allowable under Section 168).
If you expect to have lower income in the current year than in the previous year, you can submit a revision of your estimated income via Iris. This can also change your Advance Tax FBR Liability (if you had selected advance tax) to a number more realistic.
Check for Exemptions
Advanced Tax is not applicable to all taxpayers. You may be exempt if:
Latest declared annual taxable income is below PKR 1 million.
You are a salaried person with TDS under section 149.
Your income is subject to final tax schedule (such as dividends, importers & rent).
If you are eligible for the exemption, send them their notice and supporting documents like income statement or salary slip as your proof of being exempt. This can be submitted through the Iris portal to avoid any penalties.
Pay Taxes in Time with FBR Advance Tax Challan
To avoid the notice, pay the advance tax within due dates. 1: FBR Advance Tax Challan Here is how you can make FBR Advance Tax Payment and Download it using IRIS portal (e.fbr. gov.pk) by following these steps:
Log in to your Iris account.
Go to the “e-Payments” tab and click on “Create Payment.”
Select “Income Tax” and create a Payment Slip ID (PSID).
Payment can be made through online banking, ATM or a bank counter.
Remember to preserve the proof of payment, which includes the paid challan for future use. Paying on time can also save you having to pay a penalty interest of as much as 0.1 percent a day, or a default surcharge of 12 percent a year, on amounts due but unpaid.
File a Revised Estimate if Necessary:
If your income has fallen sharply from the prior year, then submit a revised estimate of final income before the last instalment is due (June 15). Submit financial documentation, including your Profit & Loss Statements with the application to support why you feel the change should be made. This will lower your advance-tax liability in the other quarters
Avoid Common Mistakes
Avoid these mistakes to avoid stress, penalties and fouls:
- Disregarding the Notice: Failure to comply may lead to legal action or financial penalties.
- Payment Without Confirmation: Always make sure, the amount is demanded from you before making payment.
- Failure to Pay on Time:If you miss your payment deadlines, penalties and interest await.
- Advance Tax is Assume Final: The advance tax adjustment with the final not in filing return in each year.
Seek Professional Help
It can be difficult to navigate the regulations laid out by Advance Tax Notice Pakistan especially for those who have more than one income channel. Are you getting confused on how do I calculate my advance tax for FBR? You better consult with a tax consultant or chartered accountant so that the calculation should be accurate and according to the law of Advance Tax FBR. They can help with filing appeals if you disagree with how much the FBR calculated and revised your tax after accepting an estimate.
Stay Stress-Free with CBM Consultants
CBM Consultants can help you comply with FBR’s Section 147 Notice by running a calculation around advance tax, comparing the numbers to estimations made by the FBR, making payments in full at the correct time and defending your stance if a dispute arises. We also offer strategic tax planning, maintaining proper documentation and managing instalment schedules, all of which can help your avoid penalties, mitigate risks and concentrate on your business while ensuring your compliance with the Income Tax Ordinance.
Conclusion
Receiving an Advance Tax Notice doesn’t necessarily mean you have to be disheartened. Interpret the notice, confirm your tax liability, and look for exclusions. Paying through FBR Advance Tax Challan at due dates you can stay tax compliant without a tension. In cases of doubt, professional tax advisors can provide clarity and support. Remain proactive, maintain proper records and manage Advance Tax Notice. For detailed tax details, please visit the official website of FBR or consult with a tax professional.
