What is Advance Tax?
Advance tax is a type of tax that is paid in advance of the final tax liability. It is required by law for certain businesses and individuals in Pakistan. The amount of advance tax that is due is based on the taxpayer’s estimated income for the year.
Who Must Pay Advance Tax?
The following businesses and individuals are required to pay advance tax in Pakistan:
- Companies
- Partnerships
- Trusts
- Individuals with taxable income of more than PKR 10 million
How to Pay Advance Tax
There are several ways to pay advance tax in Pakistan. You can pay it online, by mail, or in person at a bank or tax office. If you are paying online, you can use the government’s website or a third-party website. If you are paying by mail, you can use the government’s form or a form from a third-party. If you are paying in person, you can go to a bank or tax office and pay with cash, check, or money order.
When to Pay Advance Tax
You must pay advance tax on a quarterly basis. The due dates for the quarterly payments are:
- September 25
- December 25
- March 25
- June 15
If you are a new taxpayer, you may need to pay advance tax on a monthly basis. The due dates for the monthly payments are:
- 15th of the month
What Happens If You Do Not Pay Advance Tax
If you do not pay enough advance tax, you may be subject to penalties. The penalties can be quite severe, so it is important for taxpayers to make sure that they pay the correct amount of advance tax.
The penalties for not paying advance tax are as follows:
- For the first month that the tax is not paid, the penalty is 5% of the amount due.
- For each subsequent month that the tax is not paid, the penalty is 10% of the amount due.
- In addition to the penalties, you may also be subject to interest on the amount due. The interest rate is the same as the federal interest rate.
How to Appeal an Advance Tax Assessment
If you disagree with an advance tax assessment, you have the right to appeal. You must file an appeal with the Commissioner of Income Tax within 30 days of the date of the assessment.
The appeal will be heard by a Board of Revenue. The Board of Revenue will consider the evidence presented by both the taxpayer and the Commissioner of Income Tax. The Board of Revenue will then make a decision.
If the Board of Revenue upholds the assessment, you may appeal to the Federal Board of Revenue. The Federal Board of Revenue is the highest tax authority in Pakistan. The Federal Board of Revenue will consider the evidence presented by both the taxpayer and the Commissioner of Income Tax. The Federal Board of Revenue will then make a final decision.
Conclusion
Advance tax is a complex topic, but it is important for taxpayers to understand their obligations. By understanding the rules and filing on time, taxpayers can avoid penalties and ensure that they are paying the correct amount of tax.
