As per the Finance Act 2020, for the persons appearing in an Active Taxpayers List (ATL), condition for the advance tax on educational fee under Section 236I of Income Tax Ordinance, 2001 has been abolished.

However, the condition for paying advance tax on educational fee is still valid for those not appearing in ATL.

Also, it has been made the requirement for educational institutes to provide details of those Non-ATL persons making a fee of more than Rs.200000 per annum.

The tax shall be collected under section 236I at a rate of 5 percent of the amount of fee for persons not appearing on ATL.

The collection of advance income tax on payment of the educational fees was introduced through Finance Act, 2013. The purpose of introducing the advance tax on such transaction was to bring those people into tax net who have taxable income but not paying their tax liability.

However, advance tax payable is adjustable against income tax liability, if the persons ensure his name on ATL and also files the income tax return.