147 (Intimation to Pay Advance Tax )
Dear Taxpayer,
It is intimated that you are liable to pay advance tax u/s 147 of the Income Tax Ordinance, 2001 for this quarter. The liability of advance tax for the quarter is shown in the table at the end.
2. Please note that this is minimum estimated advance tax liability for the quarter. However, if your advance tax liability is more than given in the table, you are bound by law to pay actual liability for the quarter.
3. You are requested to pay your advance tax before the statutory date as provided in section 147 without fail. In case of difference in your advance tax liability for the quarter, you may intimate this office duly supported by documentary evidence, on or before the due date through your online Iris account (https://iris.fbr.gov.pk/public/txplogin.xhtml). Please note that non-payment of advance tax may invoke penalty and default surcharge provisions of Income Tax Ordinance, 2001.
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When Do You Receive a Section 147 Notice from FBR?
You receive a Section 147 notice from the Federal Board of Revenue (FBR) in Pakistan when you are required to pay advance tax. This typically applies to individuals with significant income, businesses, and companies. The FBR issues this notice to ensure timely collection of taxes throughout the financial year.
Why Did You Get a Section 147 Notice from FBR?
The primary reasons for receiving a Section 147 notice include:
- Regular Income: You have a consistent income that meets the threshold for advance tax payments.
- Business Ownership: You own a business or are part of an Association of Persons (AOP).
- Corporate Entity: Your company is required to pay advance tax.
- Previous Tax History: Based on your tax payments in previous years, the FBR expects you to owe a significant amount of tax.
What Should You Do After Receiving a Section 147 Notice from FBR?
Upon receiving a Section 147 notice, it’s crucial to take prompt and appropriate action. Here’s a detailed guide on what you should do:
1. Understand the Notice
Carefully review the notice, noting:
- The amount of advance tax due
- The deadlines for each installment (typically 25th September, 25th December, 25th March, and 15th June)
- Any specific instructions or requirements mentioned in the notice
2. Calculate Your Advance Tax Liability
For Individuals: Advance Tax = (Tax Assessed for Latest Year ÷ 4) – Tax Paid in the Quarter
For AOPs and Companies: Advance Tax = ((A × B) ÷ C) – D Where: A is the turnover for the quarter B is the tax assessed for the latest tax year C is the turnover for the latest tax year D is the tax paid in the quarter for which tax credit is allowed under Section 168
3. Prepare to Pay the Advance Tax
- Review the amount due as specified in the notice
- Ensure you have the funds available to make the payment
- Mark the payment deadlines in your calendar
4. Make the Payment
- Use the FBR’s online portal (IRIS) to make the payment
- Pay before the due date to avoid penalties
- Keep a copy of the payment receipt for your records
5. File an Estimate if Necessary
If you believe your advance tax liability differs from the amount in the notice:
- File an estimate of your income for the year through your IRIS account
- Provide documentary evidence to support your estimate
6. Respond Promptly
- Adhere to the deadlines specified in the notice
- Be aware that non-compliance can result in penalties and interest charges
7. Seek Professional Assistance if Needed
If you’re unsure about calculating your advance tax or responding to the notice:
- Consult a tax advisor or professional
- They can help ensure your calculations are accurate and your response is compliant
8. Keep Detailed Records
Maintain copies of:
- The Section 147 notice
- Your advance tax calculations
- Payment receipts
- Any correspondence with the FBR
These records will be valuable for future tax filings and potential audits.
9. Plan for Future Payments
- Set aside funds regularly to meet future advance tax obligations
- Consider adjusting your business’s cash flow to accommodate these payments
Looking ahead
Receiving a Section 147 notice from the FBR is a routine part of the tax process for many Pakistani taxpayers, but it requires careful attention and prompt action. By understanding the notice, accurately calculating your advance tax liability, and making timely payments, you can ensure compliance with Pakistani tax regulations and avoid potential penalties.
Remember, the key is to act quickly and accurately. If you’re unsure about any aspect of the process, don’t hesitate to seek professional help.
At ABH Consultants Islamabad, we specialize in assisting individuals and businesses with complex tax matters, including responding to FBR notices and managing advance tax payments. Our team of experienced tax professionals can guide you through every step of addressing a Section 147 notice, ensuring that you comply fully with FBR requirements and optimize your tax position.
Reach out to help if you are unable to file your Tax Returns Properly