Advance Tax Computation & Filing in Lahore

What advance tax is

Section 147 requires many taxpayers to pay income tax in quarterly instalments during the year rather than in one payment after it ends. It is not an extra tax, it is the same liability, collected earlier, and it is credited against your final assessment. Getting it wrong is expensive in two different directions.

Both failure modes cost money

Underpay and you face default surcharge under section 205 on the shortfall, running from the date each instalment was due. It accrues quietly and lands as a real number when the return is assessed.

Overpay and you have handed the government an interest-free loan for up to a year, recoverable only by claiming a refund, which takes its own sweet time. For a business with working capital pressure, and that is most businesses in Lahore, this is a genuine cost, not a technicality.

The point of doing this properly is to land close to the actual number.

The basis matters

How the instalment is computed is not the same for every taxpayer. Companies and other taxpayers are treated differently, and the calculation can run off turnover for the quarter or off the tax assessed for the latest tax year, with credit for tax already collected from you at source. Businesses that have grown or shrunk sharply since their last assessment are the ones most likely to be paying a figure that bears no relation to the year they are actually having.

Revised estimates

If your income for the year is going to be materially lower than the basis your instalments are computed on, the Ordinance allows an estimate to be filed so the remaining instalments reflect reality. This is underused. A trader whose sales collapsed in the second half of the year should not be paying instalments calculated on the previous year's good numbers, and does not have to. There are conditions and a form, and the estimate needs to be defensible, but it is available.

Who this applies to

Companies and AOPs of any size, and individuals whose latest assessed tax exceeds the prescribed threshold, are the usual population. A salaried person whose tax is fully deducted at source by their employer is generally outside it. If you are not sure which side you are on, that is a five-minute question and worth asking before a surcharge accrues rather than after.

The quarterly rhythm, and how payment works

Advance tax follows the quarters of the tax year, September, December, March and June, with the final instalment falling due before the year closes on 30 June, so the last quarter's deadline arrives earlier in the month than the others. Each payment is made through a PSID challan generated on IRIS and deposited at a bank or through mobile banking, producing a CPR that is credited against your NTN. Two disciplines keep this painless: generate the challan a week before the due date, not on it, because bank and portal problems cluster on deadline days; and file the CPRs somewhere retrievable, because at assessment time the credits claimed must match the deposits FBR can see. We keep the calendar and the archive as part of the engagement, so the September question is "here is the challan" rather than "when was it due?".