SULTAN TAX ASSOCIATES TAX YEAR

TAXATION OF ADVANCE TAX 2013

ADVANCE TAX
SECTION 147
SECTION 147(1)
Every taxpayer whose income was charged to tax for latest tax year shall be liable to pay advance
tax in accordance with this section.

The following incomes chargeable to tax are not liable to pay advance tax:
i) Income chargeable to tax under section 5, 6 and 7 i.e. income from Dividend, Tax on certain
payments to non-resident and Tax on shipping and air transport income of a non-resident.
ii) Income chargeable to tax under section 15 i.e. income from Property.
iii) Income subject to deduction of tax at source under section 149 i.e. Sale of Attached Property
by the Commissioner and
iv) Income from which tax has been collected under Division II or deducted under Division III or
deducted or collected under Chapter XII and for which no tax credit is allowed as a result of
sub-section (3) of section 168 i.e. Income covered under presumptive tax regime and tax
deducted is full and final discharge of its tax liability.
v) An individual latest assessed taxable income excluding incomes from Dividend, Property and
Presumptive income is less than five hundred thousand rupees.

Advance tax is payable by the following categories of tax payers:

INDIVIDUAL If assessed total income as per the latest completed
assessment is Rs. 500,000/-
AOP & The amount of advance tax due for a quarter shall be
COMPANY computed according to the following formula:

(A x B / C)-D

Where:
A. Is the taxpayers turnover for the quarter.
B. Is the tax assessed to the taxpayers for the latest tax year.
C. Is the taxpayers turnover for the latest tax year; and
D. Is the tax paid in the quarter for which a tax credit is allowed under section* 168, other
than tax deducted under section** 155.
(*) Tax credit under this section is allowed of all taxes paid at source (other than those which
fall under final tax regime).
(**) This represents tax deducted relating to property income which becomes the final tax

EXAMPLE FOR PAYMENT OF ADVANCE TAX IN CASE OF COMPANIES:

TURNOVER FOR THE QUARTER x TAX ASSESSED FOR THE LATEST TAX YEAR
TURNOVER FOR THE LATEST TAX YEAR

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 SULTAN TAX ASSOCIATES TAX YEAR
TAXATION OF ADVANCE TAX 2013

SUB-SEC. (4AA) OF SEC.147:

In terms of sub-section (4AA) of section 147 where normal tax is not payable, advance tax will be
payable with reference to minimum tax payable for the latest tax year. It means that an Individual/AOP &
Company While working out payment of Advance tax liability tax payable under section 113 i.e.
minimum tax payable shall be considered. This also cover the tax on income of certain person i.e. Retailer
whose turnover is upto Rs. Five million for any tax year are also liable to pay advance tax.

SUB-SEC. (4A) OF SEC. 147:

In terms of sub-section (4A) of section 147 any taxpayer whose income for any tax year is likely to be
more than the income on the basis of latest tax year, (on the basis of which advance tax is required to be
paid), shall have to file estimate of income before the last installment of advance tax is due and shall pay
the advance tax on the basis of such estimate.

SUB-SEC. (4B) OF SEC. 147: INDIVIDUAL:

Individual are liable to make the payment of advance tax on quarterly basis If the latest assessed or
declared income is Rs. 500,000/- or more on the basis of following formula:

(A/4) B
Where:
A. is the tax assessed to the taxpayer of the latest tax year or latest assessment year under the
repealed Ordinance: and
B. is the tax paid in the quarter for which a tax credit is allowed under section 168, other than tax
deducted under section 149 or 55

NOTE: Under section 80(2) (a) association of persons includes a firm, a Hindu Undivided
Family, any artificial juridical person and anybody or persons formed under a foreign law but do
not include a company.

SUB-SECTION 6 OF SECTION 147:

The taxpayers have been allowed the facility of filing estimate of income for advance tax if it is
estimated to be lower than the income as per last return or income for the year is likely to be more than
the income on the basis of latest tax year, on the basis of which advance tax is required to be paid, shall
have to file estimate of income before the last installment of advance tax is due and shall pay the advance
tax on the basis of such estimate, which should be correct upto 90% of the final tax liability for that year
in order to avoid penal provisions of levy of additional tax u/s205(1B) of the shortfall

If the payment of advance tax on the basis of estimate falls short of 80% of the actual liability additional
tax shall be payable @ 12% u/s. 205.

SUB-SEC. (6A) OF SEC. 147:

Above section provides that a company or an AOP in the absence of last assessed income or declared
turnover, shall estimate the advance tax payable on the basis of quarterly turnover and pay tax thereon
after taking into account minimum tax payable u/s 113 as provided in sub-section (4AA) of section 147
and by making adjustment of any amount already paid.

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 SULTAN TAX ASSOCIATES TAX YEAR
TAXATION OF ADVANCE TAX 2013

SUB-SECTION (5) OF SECTION 147:

The Schedule of advance tax payment in cases of individual is as under:

1) Quarter ending 30th September 15th September

2) Quarter ending 31st December 15th December
3) Quarter ending 31st March 15th March
4) Quarter ending 30th June 15th June

SUB-SECTION (5A) OF SECTION 147:

The Schedule of advance tax payment by Companies and Association of Persons are as under:

1) September Quarter On or before 25th September

2) December Quarter On or before 25th December
3) March Quarter On or before 25th March
4) June Quarter On or before 15th June

SUB-SECTION (5B) OF SECTION 147:

Advance tax on Capital Gains on sale of securities shall be payable on quarterly basis as under:

S# PERIOD RATE

1 Where holding period of a security is less than 2% of the capital gain

six months derived during the quarter

2 Where holding period of a security is more 1.50% of the capital gain

than six months but less than twelve months derived during the quarter

The advance tax shall be payable within seven days after the close of each quarter and the Second proviso
to sub-section (5) provides that these provisions will not be applicable to individual investors.

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