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Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. •

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Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. •

Salaried Taxpayers can Adjust Advance Taxes with Employers in Pakistan

Reduce your Pakistan salary tax! Adjust advance taxes (foreign payments, utilities, etc.) against salary tax with your employer using Form 3 for lower monthly deductions. Save money!

Tax season in Pakistan can feel overwhelming, but there’s a hidden gem called “advance tax adjustments” that can significantly reduce your final tax bill. This article empowers you, the consumer, to understand how to leverage this benefit and save money!

What is Advance Tax?

Unlike the income tax deducted from your salary, advance tax is a pre-payment system for various income sources. You essentially pay the government a portion of your estimated tax liability throughout the year. Here are some common examples of advance tax payments:

Token Tax: Paid on registration or renewal of your vehicle.
Taxes on Property Transactions: Paid when buying, selling, or transferring property.
Auction Taxes: Paid on purchases made through auctions.
Advance Taxes on Withdrawals: Applicable on large cash withdrawals from banks (Non Filers only).
Taxes on Utility Bills: Included in your telephone and internet bills.
Taxes on Entertainment: Paid on things like TV plays, advertisements, functions, and gatherings.
Remittance Taxes: Paid when sending money abroad using cards. Like on payments to Facebook, Twitter or Online shopping via Temu, AliBaba etc

Adjusting Advance Tax with Employer

The beauty of advance tax lies in its adjustability. If you’ve paid any of these advance taxes during the financial year (July 1st to June 30th), you can claim them back! You can submit Form 3 at any point during the tax year to adjust your tax liability. However, submitting it earlier in the year maximizes its benefit throughout the tax year. Here’s how to adjust your advance taxes with employer:

Gather Proof: Collect documents like receipts, challans, tax deduction certificates or bank statements that prove your advance tax payments. If you are a Registeraed user with FBR, the CPR access becomes fairly simple.
Simply take out the print from the excel sheet available and hand it over to your account department for adjuustment of taxes. You can follow this guide to know exacly how much adjustable taxes you have on your name.
How to Easily Check Your FBR Tax Information Online Using Your CNIC
IT Form 3 and Your Employer: During tax season, fill in Form 3 and submit to your employer. Attach your proof of advance tax payments to this form. Essentialy in the month or May of June so you can get adjustment in the salary tax. If you think your annual adjustment is more than one month salary then submit it earlier.
Employer Adjustment: Submit the completed Form 3 and proof of payments to your accounts department. Your employer will review your claim and make necessary adjustments to your taxable income and Withholding Tax (WHT) as applicable.

Example of Adjusting Tax with Employer

Mr. Ebrahim, a salaried employee in eBrain, makes a foreign transaction of PKR 100,000 via credit card and pays PKR 5,000 (5%-active) as withholding tax. This occurs during the financial year while eBrain is already deducting salary tax monthly (U/S 149). Mr. Ebrahim wants this PKR 5,000 tax adjusted against his ongoing salary tax deductions now, rather than waiting until year-end. So he’ll;

Obtain proof of the tax payment (e.g., withholding tax deduction certificate from Bank).
Submit this proof, potentially with an updated Form 3, to his employer’s payroll department, requesting adjustment.

Employer’s Action: The employer verifies the proof and recalculates Mr. Ebrahim’s remaining annual tax liability by deducting the PKR 5,000 already paid. The remaining tax is spread over the subsequent months, resulting in a lower monthly tax deduction from Mr. Ebrahim’s salary for the rest of the financial year.

Benefit: This provides Mr. Ebrahim with the tax credit benefit sooner. While this is a provisional adjustment by the employer, the PKR 5,000 is formally claimed when Mr. Ebrahim files his final annual tax return with FBR, supported by the same proof, along with other withholding tax details (like those from year-end certificates).

Note: Same scenerios can be applied on all adjustable taxes.

Benefits of Advance Tax Adjustments:

By claiming advance tax adjustments, you unlock several advantages:

Reduced Tax Burden: The adjusted advance tax acts as a credit, lowering your final tax liability and potentially reducing the amount you owe to the government.
Tax Refunds: If your total advance tax payments exceed your actual tax liability, you may be eligible for a tax refund from the government!
Avoid Overpayment: Ensures you don’t pay more tax than you actually owe by claiming all eligible deductions and credits.
Optimize Tax Position: Helps you manage and optimize your tax liability throughout the year, rather than waiting for year-end filing.
Simplified Year-End Filing: By making adjustments throughout the year, the year-end tax return process becomes less complex and potentially reduces the chance of errors.

Understanding and utilizing advance tax adjustments, you can become a more informed taxpayer. This strategy can significantly reduce your tax burden and potentially lead to tax refunds, putting more money back in your pocket!

Mah Noor

An aspiring Chartered Accountant with a growing footprint in Pakistan’s tax education and digital finance content landscape. Currently, I work as the Editor-in-Chief at TaxationPk, where I lead content strategy, quality control, and editorial planning for tax-related blogs, news articles, and social media outreach.

Articles: 36

10 Comments

Khan Gee

July 30, 2025 / 10:35 am Reply

If employer do not accept Form III alongwith evidence documents and do not adjust tax. Is there any section which bound employer to adjust tax.
- Binte Zafar
  
  July 30, 2025 / 12:21 pm Reply
  
  Compliant to FTO.
  Employer is liable to adjust adjustable taxes during the year upon submission of IT Form III.
SHI Jafrie

July 19, 2025 / 7:13 pm Reply

Can someone apply for tax adjustment right now to his employer on profit on debt he earned last tax year 24-25?
- Hayat Akbar
  
  July 20, 2025 / 3:49 am Reply
  
  You cannot adjust previous years (2024-25) WHT with your employer in current year (2025-26). You should also be informed that WHT on profit on debt isn’t adjustable.
Asim

March 5, 2025 / 1:09 pm Reply

Taxes on Property Transactions: Paid when buying, selling, or transferring property. please mentioned the cirlcular for adjustment of tax liability od salaried tax payer on purchase of property
- Binte Zafar
  
  March 5, 2025 / 3:34 pm Reply
  
  Submit Form 3 with employer for adjustment of (adjustable) taxes.
  - Hamza
    
    June 24, 2025 / 12:01 pm Reply
    
    Can non filer NTN holder adjust the tax through IT-3 form? Also need reference.
    - Binte Zafar
      
      June 24, 2025 / 6:40 pm Reply
      
      yes they can.
      there is no prohibition in law for this.
Wahab Khan

November 1, 2024 / 4:09 pm Reply

What if the refunds/ advance tax relate to the previous financial year. My employer says there is no provision clearly mentioned in the tax ordinance which allows it. however, a normal practice by the employers is to adjust the refunds of the previous years against the current and future salaries.
- Binte Zafar
  
  November 1, 2024 / 4:59 pm Reply
  
  Employer can only adjust in the current year. Employee has to submit IT Form III alongwith documents of taxes deducted for adjustment.