Got 147 (Intimation to Pay Advance Tax ) Notice from FBR – What should you do?

147 (Intimation to Pay Advance Tax Notice

SHOW CAUSE NOTICE 147 (Intimation to Pay Advance Tax )

Please refer to the above.

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.
4. We look forward to your cooperation for promoting tax compliant culture in Pakistan.
Auto
Generated Description Rate
Advance Tax (Quarterly)
Code Declared
Normal Income Tax of latest Year 920000 0 xxx,072
Normal Income Tax of latest Year 920000 0xxx,072
A) Tax assessed for the latest tax year (Highest of the above) 920xxx02 0 170,072
1/4th of Tax assessed for the latest tax year 92020115 0 42,518
B) Adjustable tax paid during the quarter 92020104 0
Net Advance Tax Liability for the Quarter 920xxx19 0 42,518

A 147 Notice from the Federal Board of Revenue (FBR) is an intimation to pay advance tax under Section 147 of the Income Tax Ordinance, 2001. This notice informs you that FBR believes you are required to pay advance tax for the ongoing tax year.

What You Should Do Upon Receiving a 147 Notice:

1. Understand the Purpose of the Notice

Advance Tax: Section 147 of the Income Tax Ordinance requires taxpayers to pay advance tax in installments if their tax liability is expected to exceed a certain amount in the tax year.
Instalments: The notice may include details of the installment amounts and due dates for payment. Advance tax payments are made in four installments during the tax year.

2. Review the Notice Carefully

Amount of Advance Tax: The notice will specify the amount of advance tax FBR expects you to pay. This may be based on estimates or previous year’s tax liability.
Due Dates: Pay attention to the due dates for each installment. Missing the deadlines can result in penalties and interest.
Taxpayer Classification: The notice might apply to different types of taxpayers (individuals, companies, etc.). Make sure you are clear on the tax obligations for your classification.

3. Check the Basis for the Demand

Taxable Income Estimate: FBR may have estimated your taxable income based on last year’s filings or other available information. Verify if this estimate is accurate.
Revised Assessment: If your income or business activity has changed, check whether you need to adjust the advance tax payments based on your revised income.
Review Previous Payments: Ensure that any advance tax you have already paid has been accounted for in the notice. If you’ve made payments but the notice doesn’t reflect them, contact FBR to resolve the discrepancy.

4. Calculate Your Actual Tax Liability (if Necessary)

Tax Calculation: If you believe that the advance tax estimated by FBR is inaccurate (e.g., due to changes in income or business activity), calculate your actual tax liability based on your income and expenses for the current year.
Seek Professional Help: If you’re unsure how to calculate the advance tax, consult a tax professional (such as a chartered accountant or tax consultant). They can help you determine the correct tax liability and any necessary adjustments to the advance tax installments.

5. Make the Payment

Pay on Time: To avoid penalties and interest, pay the advance tax on or before the due dates specified in the notice. The payments are typically made through the FBR’s online tax payment system.
Payment Mode: Use the designated payment modes available via the FBR’s e-filing system or authorized banks.
Retain Proof of Payment: Keep the payment receipts as proof of payment, as FBR may require them in the future.

6. Submit a Revised Estimate (if applicable)

Request Adjustment: If your actual income or tax situation differs significantly from the estimate made by FBR, you can request an adjustment. This is typically done by submitting a revised estimate of income and taxes to FBR.
Use the Online System: FBR’s e-filing system allows taxpayers to submit revised estimates for advance tax. If your income has decreased, you might be able to reduce the amount of advance tax you need to pay.
Supporting Documents: Ensure you provide any supporting documents (such as financial statements, income statements, etc.) to justify the revised estimate.

7. Respond to the Notice (if necessary)

Dispute the Notice: If you believe the notice is incorrect (for example, if you’ve already paid advance tax or your income is lower than expected), you can dispute the demand by contacting FBR or submitting a formal request for revision or review of the demand.
Appeals Process: If you disagree with FBR’s assessment or advance tax calculations, you can file an appeal with the relevant tax tribunal or FBR’s appellate authority. It’s advisable to consult with a tax lawyer or consultant before pursuing this option.

8. Penalties for Non-Payment or Late Payment

Interest and Penalties: If you fail to pay the advance tax on time or don’t make the full payment, FBR may impose interest charges and penalties as per the Income Tax Ordinance.
Late Payment: Ensure that the payment is made on time, as late payments can accumulate interest from the due date.

9. Monitor Future Payments

Follow the Schedule: Continue to make advance tax payments as required in the notice for the rest of the tax year. Ensure you meet all future deadlines to avoid additional penalties.
Keep Records: Maintain accurate records of all advance tax payments for the current year and for any adjustments made. You will need these when filing your final tax return for the year.

Possible Outcomes:

Compliance: If you make the payment on time, there will be no further issues, and the advance tax will be credited toward your final tax liability when you file your return.
Penalties: Failing to pay the advance tax may result in penalties and interest being charged by FBR. In some cases, if the failure to comply is significant, FBR may take legal action.
Tax Refund: If your actual tax liability is lower than the advance tax you paid, you may receive a refund when you file your final tax return.
Click here to read about also Got Notice to impose sanctions for noncompliance to AML/CFT obligations under AMLA, 2010 from FBR – What should you do?

Conclusion:

The 147 Notice from FBR is an advance tax payment intimation. It’s crucial to carefully review the notice, ensure that the payment is made on time, and consult with a tax professional if needed. Correctly estimate your tax liability, make the necessary payments, and ensure compliance with FBR’s advance tax requirements to avoid penalties. If you believe the advance tax estimate is incorrect, you can submit a revised estimate to FBR.