A notice under section 147 calls for the payment of advance tax on income which FBR estimates you will earn during the current tax year. It is a forward-looking demand and not a rectification of a past return. If you have received a notice asking you to make advance tax payments, knowing what advance tax is should help you know how best to respond to avoid overpaying or failing to pay altogether.
What Advance Tax Under Section 147 Is
Business and Professional taxpayers whose income in the immediately preceding tax year exceeded a stipulated amount are required to pay advance tax in installments during the year in respect of their estimated income for the year. The estimation and installment schedule are governed by section 147.
Who Gets These Notices
Companies, AOPs, and individuals with business income in excess of the stipulated amount in the immediately preceding tax year are required to pay advance tax in installments. FBR may also send a notice intimating the estimated amount payable for a quarter if the taxpayer has not estimated and paid their own share of advance tax for that quarter.
How the Estimate Is Made
The estimate is made by applying the ratio of the latest assessed tax year to the current year in respect of the estimated income for the quarter, unless a taxpayer files an estimate based on their own calculation of expected income, which is lower than that of FBR.
What You Should Do Upon Getting This Notice
Check whether FBR’s estimate is close to your own estimate of income for the year. If it is, you should pay the installment due by the due date. If your own estimate of income is significantly lower than that of FBR, you may file an estimate of your own income with reasons why it should be used to determine your quarterly installments instead of FBR’s calculation.
What Happens if You Do Not Pay
Default surcharge applicable to the amount of unpaid installment accrues on the unpaid amount from the due date until the payment is made. The calculation of the final tax liability due for the year will be net of the advance tax paid.
Other FBR Notices: See our 182(2) notice guide.
How to Check Notices and Make Payments: Log in to FBR IRIS Portal directly.
