Government of Pakistan
Ministry of Finance, Economic Affairs,
Statistics and Revenue Division
Islamabad, May 25, 2004
Circular No. 2 of 2004
SUBJECT: PAYMENT OF ADVANCE TAX UNDER SECTION 147 OF THE INCOME TAX ORDINANCE, 2001 – INSTRUCTIONS REGARDING.
Queries have been received on the issue as to what would be the tax – turnover ratio to be applied for payment of advance tax for each quarter under section 147 of the Income Tax Ordinance, 2001.
2. The issue has been examined in the Board. Instructions contained in Para 13(b) of CBR’s Circular No.4 of 1979 dated August 23, 1979 envisage that advance tax shall be payable on the basis of latest assessment completed upto 15th September and this basis shall not change throughout the income year on account of completion of an assessment of a later year thereafter. The provision of sub-section (4) of section 147 provides a formula for computation of the amount of advance tax to be paid for a quarter. The tax – turnover ratio is to be determined on the basis of assessment of the latest tax year. The introduction of Universal Self-Assessment Scheme (USAS) coupled with the legal provisions that assessment would be treated to have been made on the date the return is filed and the fact that assessment so completed or assessment of earlier tax year may be amended during the currency of the tax year have rendered the instructions contained in para 13(b) of Circular No.4 of 1979 as redundant. Accordingly, instructions of the said para being no more applicable are hereby rescinded.
3. It is clarified that the tax – turnover ratio for each quarter would be the one which exists prior to the prescribed date of payment of advance tax for the relevant quarter.
4. It is also clarified that in case of taxpayers having special income year, the credit for payment of advance tax shall be allowed in respect of the quarters falling within such income year e.g. in case of a company closing its accounts on December 31, 2004, the credit of advance tax shall be allowed for tax year 2005 in respect of advance tax paid for the quarters ending March 31, 2004, June 30, 2004, September 30, 2004 and December 31, 2004.
SECRETARY (IT POLICY)