Advance Tax in Pakistan 2026-27 — The Complete Guide to Quarterly Payments
Most people pay their tax at the end of the tax year — but Section 147 requires some taxpayers to pay it in quarterly advance instalments. This guide has the full working: who it applies to, how each instalment is worked out, and what happens if you pay late.
1. What Is Advance Tax?
Advance tax is income tax paid in four quarterly instalments during the year — without waiting for the end of the year. For an individual, each instalment is worked out from the tax assessed for the previous tax year, not from an estimate of this year's tax (see section 3). It applies under Section 147 of the Income Tax Ordinance 2001.
Who does it apply to? The condition is on taxable income, not on tax. Section 147(2): the section does not apply at all to an individual whose assessed taxable income for the previous year is less than Rs. 1,000,000 — and salary (Section 149) and final-tax income are left out of that calculation.
2. Advance Tax Quarterly Deadlines 2026-27
The tax year runs from July to June. The deadlines for the four quarters are:
| Quarter | Period | Payment Deadline | Amount |
|---|---|---|---|
| Q1 | July – September | September 15 | 1/4 of assessed tax, minus that quarter's creditable WHT |
| Q2 | October – December | December 15 | 1/4 of assessed tax, minus that quarter's creditable WHT |
| Q3 | January – March | March 15 | 1/4 of assessed tax, minus that quarter's creditable WHT |
| Q4 | April – June | June 15 | 1/4 of assessed tax, minus that quarter's creditable WHT |
3. Advance Tax Calculation — Real Example
Section 147(4B) gives the formula for an individual: (A ÷ 4) − B. Here A is the tax assessed for your previous tax year, and B is the tax already deducted from you in that same quarter for which you get credit under Section 168 — salary deducted under Section 149 is not included. Suppose your assessed tax last year was Rs. 2,000,000:
| Quarter | Deadline | Amount (25%) |
|---|---|---|
| Q1 | Sep 15, 2026 | Rs. 500,000 |
| Q2 | Dec 15, 2026 | Rs. 500,000 |
| Q3 | Mar 15, 2027 | Rs. 500,000 |
| Q4 | Jun 15, 2027 | Rs. 500,000 |
| Total Advance Tax | Rs. 2,000,000 | |
This is not the final amount. The table shows only A ÷ 4. Any WHT already deducted in that quarter — for example under Section 153 — becomes B and is subtracted, so the actual instalment works out lower. At year end this is adjusted in your return; if you paid more you get a refund, and if you paid less you must pay the balance.
4. How to Pay Advance Tax on IRIS
- Log in to the IRIS portal: log in at iris.fbr.gov.pk with your credentials.
- Go to the Declaration menu: select the "Advance Tax" option — the quarterly instalment form is here.
- Select the quarter: choose the relevant quarter (Q1, Q2, Q3 or Q4).
- Enter the amount: the Section 147(4B) working — a quarter of last year's assessed tax, minus that quarter's creditable WHT.
- Generate a PSID: generate the payment slip (PSID). With a PSID, payment can be made at any bank. See the PSID guide here.
5. Penalty for Not Paying Advance Tax
Late Payment Consequences
- Default surcharge: 12% per annum under Section 205(1A), from the instalment's due date until the day you paid or the day that year's return was due — whichever comes first. (Section 205(1) excludes advance tax)
- Audit risk: not paying advance tax can lead to an FBR audit notice
6. Who Does Not Have to Pay Advance Tax?
These people are exempt from advance tax:
Advance Tax Exemptions
- ✅ Assessed taxable income under Rs. 1,000,000 — the Section 147(2) test
- ✅ Salary-only earners — Section 147(1)(c) keeps salary out of the base
- ✅ First-time filers — Section 147(1) applies to someone whose income was charged in the previous tax year
- ✅ Final-tax income — Section 147(1)(b) and (d) take it out of the base
7. Advance Tax vs Withholding Tax — What Is the Difference?
| Aspect | Advance Tax | Withholding Tax |
|---|---|---|
| Who pays? | The taxpayer directly | Deductor (employer/bank) |
| When is it paid? | Quarterly (4 times) | At the time of the transaction |
| Is it adjustable? | Yes — against your own liability | Depends on the section. Goods, services, contracts (153) and rent (155) are adjustable; bank profit and dividends are final tax — Sections 7B and 8 |
| Applicable on | Business/high income earners | Salary, bank profit, property |
8. FAQ — Advance Tax Pakistan
What is advance tax in Pakistan and who has to pay it?
Advance tax is income tax paid in four quarterly instalments rather than once at year end, under Section 147. For an individual the test is Section 147(2): the section does not apply where your latest assessed taxable income, excluding salary taxed under Section 149 and income already taxed as a final tax, is less than Rs 1,000,000. The test is on taxable income, not on the tax you paid.
What are the advance tax payment dates in Pakistan?
Section 147(5) sets four: the September quarter on or before 15 September, December on or before 15 December, March on or before 15 March, and June on or before 15 June.
How is each quarterly instalment worked out?
Section 147(4B) gives it as (A/4) minus B. A is the tax assessed for your latest tax year; B is tax already paid in that quarter for which you get a credit under Section 168, other than salary deducted under Section 149. Withholding collected from you during the quarter therefore reduces the instalment. The formula runs off last year’s assessed tax, so a better year does not by itself change it — Section 147(4A)’s estimate procedure is written for taxpayers paying under sub-section (4), which covers associations of persons and companies rather than individuals.
What happens if advance tax is paid late?
Section 205(1A) charges default surcharge at 12% per annum on the unpaid amount, running from the due date until you pay or until your return for that year was due, whichever comes first. Section 205(1), the general rule, expressly excludes advance tax under Section 147.
Does a freelancer have to pay advance tax?
The same Section 147(2) test applies, on taxable income rather than tax paid. Export income taxed under Section 154A is a final tax and so falls outside the income the test counts; what matters is the rest of your assessed taxable income.
Do I still file a return, and what if I overpaid?
Yes — Section 118 requires an individual’s return on or before 30 September following the end of the tax year, and the advance tax paid is taken into account there. If more was paid than was properly chargeable, Section 170 lets you apply to the Commissioner for a refund of the excess.
Related Tax Guides
Continue learning about Pakistan tax with these authoritative FBR-aligned guides.