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Business

November 1, 2015
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New company, association of persons need to pay advance tax

Business

November 1, 2015

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KARACHI: The apex tax authority has made it mandatory for a new company and association of persons to pay advance tax under the Finance Act 2015, The News learnt on Saturday.
“New company or an association of persons, are required to pay advance income tax even in the first year of their operation,” said Riaz Ahmed and Company, Chartered Accountants, in its explanation on the Finance Act, 2015.
The Federal Board of Revenue (FBR) has revised the mechanism of advance tax payment under the Finance Act.
The company’s report said that a taxpayer needs to estimate the amount of advance tax payable on quarterly income and then pay such an amount after taking into account minimum tax payable under section 113 of the Income Tax Ordinance, 2001.
“If minimum tax payable comes more than the advance tax calculated on the basis of quarterly income, then advance tax will be paid equal to minimum tax calculated at one percent on aggregated turnover of the quarter after adjustment of the amount already paid during the quarter, if any,” it said.
“If the advance tax paid on the basis of estimation is less than 90 percent of the tax chargeable for the relevant tax year, the taxpayer shall be liable to pay default surcharge at the rate of 12 percent per annum on the amount by which the tax paid by him falls short of the 90 percent.”
The firm said such default surcharge will be calculated from the first day of April in that year to the date on which the assessment is made or the 30th day of June of the next financial year.
“In case the taxpayer is an association of persons or a company, it shall estimate the tax payable by it for the relevant tax year at any time before the second installment is due,” it said.
The chartered account firm said that the taxpayer shall furnish to the Commissioner Inland Revenue on or before the due date of the second quarter an estimate of the amount of tax payable by the taxpayer and pay 50 percent of

such amount by the due date of the second quarter of the tax year after making adjustment for the amount already paid.
The remaining 50 percent of the estimate shall be paid in two equal installments payable by the due date of the 3rd and 4th quarter of the tax year, it said.

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