Advance Tax Under Section 147: The Four Dates Businesses Keep Missing

Business tax · Section 147

Most taxpayers think of tax as an annual event. For businesses above a modest threshold, it is quarterly, and the first date of the year falls in September.

All Pakistan Taxes desk · 16 August 2026

Section 147 of the Income Tax Ordinance requires advance tax to be paid in four instalments spread across the year, rather than settled in a single payment when the return is filed. It catches a far wider group than most people expect: if your assessed tax liability for the previous year exceeded Rs 100, 000, you are almost certainly within scope.

That threshold pulls in businesses, associations of persons, and a substantial number of individuals with business or freelance income who think of themselves as annual filers. For them the first surprise is usually not the amount but the calendar.

The four dates

Three of the four instalments fall on the twenty-fifth. The June payment does not; it is due on the fifteenth. That single inconsistency accounts for more missed payments than any other feature of the regime, because taxpayers who have diarised three dates correctly assume the fourth follows the same pattern.

The cost of paying late

A default surcharge runs for the period of delay, and it is calculated per instalment rather than on the year as a whole. A September payment missed and settled the following June accrues the surcharge across all nine months, not from the year end when the position is finally squared up.

Advance tax is not a prepayment of next year’s liability. It is this year’s liability, collected before the return is filed.

Calculating the instalment, and adjusting it

The default calculation takes your last assessed liability and divides it across four quarters. That works well enough when trading is stable and badly when it is not, which is why the Ordinance permits a taxpayer to file an estimate where the current year is running materially below the previous one.

Where trading is running ahead of last year, paying on the old figure is permissible but leaves a balance falling due at filing. Either way, the instalment is a starting position rather than a fixed obligation, and treating it as immovable costs money in one direction or the other.

Why overpaying is not the safe option

Businesses often default to overpaying on the assumption that any excess simply comes back. It does, but not quickly. The money sits with FBR until the return is filed, the refund is claimed and the claim is processed, and our guide to checking refund status exists precisely because that wait is routinely measured in months.

For a business with any working capital pressure, a realistic estimate filed on time is better cash management than a generous overpayment reclaimed later.

A worked example

Suppose your assessed liability for the previous year came to Rs 400, 000. The default position is four instalments of Rs 100, 000, payable on 25 September, 25 December, 25 March and 15 June.

Now suppose trading this year is running at roughly half the previous year’s level. Rather than paying the full Rs 400, 000 across the four quarters and reclaiming the excess after filing, you file an estimate and pay closer to Rs 200, 000. The final tax position is identical; the difference is that Rs 200, 000 remained available to the business for most of the year instead of sitting in a refund queue.

Making the payment

Advance tax is paid by generating a payment slip and settling it through a bank or an approved digital channel. Retain the challan for every instalment without exception, at filing, those challans are what you set against the year’s liability, and a payment you cannot evidence is, for practical purposes, a payment you did not make. Our guide to paying FBR tax through Easypaisa covers one of the more straightforward routes.

September is the pinch point

The 25 September instalment falls five days before the 30 September return deadline for individuals and associations of persons. Two distinct obligations land in the same week, and meeting one does nothing for the other: paying the instalment does not file your return, and filing your return does not discharge the instalment.

If you are preparing the annual return alongside it, our Tax Year 2026 filing guide covers that process, while freelancers carrying business income should read the freelancer filing guide for how the two obligations interact.

A short checklist

• Establish whether last year’s assessed liability exceeded Rs 100, 000. That is the trigger for the entire regime.
• Diary all four dates now, and set the June entry to the fifteenth rather than the twenty-fifth.
• If the current year is running well below the last, file an estimate instead of overpaying and waiting on a refund.
• Retain every challan. They are the evidence you set against the final liability.

Common questions