FBR Stops Advance Income Tax Notices to Salaried Individuals in Pakistan: Key Details & Impact
FBR Chairman Rashid Mahmood Langrial has ordered tax officials to stop issuing quarterly advance income tax notices to salaried individuals who rely solely on their employment salary. The decision provides administrative relief to employees whose tax is already deducted monthly by their employers.
PAKISTAN NEWS
Aagahi Hub
10/21/20262 min read
In a significant move aimed at providing relief to corporate employees and wage earners, the Federal Board of Revenue (FBR) has instructed tax officials across Pakistan to cease sending advance quarterly income tax notices to salaried individuals.
The order was issued directly by FBR Chairman Rashid Mahmood Langrial. This decision comes in response to growing frustration among middle-class workers who were receiving quarterly demand notices for advance tax—despite already having income tax deducted at source by their employers every month.
What Changes for Salaried Taxpayers?
Under normal tax administration, employers automatically deduct monthly income tax from an employee’s paycheck under Section 149 of the Income Tax Ordinance and deposit it directly with the government.
Despite this automatic deduction, many salaried taxpayers were receiving formal notices demanding quarterly advance tax deposits.
The new policy clarifies who is exempt and who remains subject to advance tax checks:
Exclusively Salaried Individuals: Employees whose only source of income is their monthly salary will no longer receive quarterly advance tax notices. Their monthly Pay-As-You-Earn (PAYE) deductions handled by employers are considered sufficient.
Salaried Individuals with Multiple Income Sources: Individuals who earn additional income—such as rental earnings, freelance profits, dividends, or commercial business income—may still be required to pay adjustable advance tax on those secondary streams according to standard tax regulations.
Tax Adjustments: Any advance tax already collected or deducted will continue to be fully adjustable against final annual tax liabilities when filing annual income tax returns.
Why Did the FBR Take This Action?
The decision follows mounting public criticism regarding the growing disparity in Pakistan's tax collection landscape.
Former Finance Minister Asad Umar recently highlighted this imbalance during a media address, noting that the salaried class contributed over Rs600 billion in direct income taxes in the previous fiscal year. In contrast, large agricultural landowners, feudal estates, and wealthy property owners across all four provinces combined contributed less than Rs10 billion.
Economic commentators also pointed out that while international oil prices had experienced fluctuations, the government continued to collect record sums through petroleum levies (increasing from Rs50 to over Rs115 per liter) and heavy direct taxation on fixed-income earners.
By eliminating duplicate or unnecessary administrative notices for formal employees, the FBR aims to reduce harassment and ease the compliance burden on the country's most consistent taxpayer group.
What Should You Do If You Receive a Notice?
If you rely solely on your salary and receive an advance tax notice from an Inland Revenue officer:
Verify Your Income Sources: Ensure that your annual income tax return reflects salary as your sole earning channel.
Contact Your Employer’s Payroll Department: Obtain a monthly tax deduction certificate (CPR / Tax Certificate) proving your employer has been withholding tax regularly.
Submit a Simple Response: File a written reply or portal response through the FBR IRIS portal referencing the Chairman's directive, stating that your income is strictly limited to salary subject to withholding under Section 149.
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