WHILE the salaried class pays due taxes throughout their working life and files annual tax returns, senior citizens over the age of 65 are required to compile financial statements and calculate and pay taxes every quarter. This is in addition to filing annual returns, resulting in tax compliance five times a year. Such an exemption from quarterly tax payments is available to senior citizens in India.

Furthermore, quarterly advance income tax notices are typically based on the previous year’s gross tax paid, without accounting for taxes already deducted at source. This approach is unfair, as tax liability can fluctuate significantly due to changes in interest rates, variations in deposited income, the deduction of 20 per cent withholding tax (WHT) by banks, and full and final tax deductions at source by mutual funds.

A more efficient system would involve developing integrated databases to assess quarterly tax liability based on actual income and taxes already deducted at source. Taxpayers could then be notified after the end of each quarter, say within 15 days, and required to make payments by the end of the following month, with room for legitimate adjustments. For example, tax for the January-March quarter could be paid by the end of April, while tax for April-June could be settled along with the annual return.

An even better alternative would be to implement fixed and final tax deductions at source on bank profits and other passive income. This would eliminate the need for quarterly advance tax payments, simplify compliance, reduce paperwork, and minimise opportunities for tax avoidance.

The Federal Board of Revenue (FBR) should consider exempting resident Pakistanis from quarterly advance income tax requirements, provided they do not earn income from business or employment.

Name withheld on request
Islamabad

Published in Dawn, May 7th, 2026