fbpx

Advance tax is a way of collection of tax by the government. If total income of an asessee exceeds Rs 10,000 in a financial year, tax is payable in installments of your yearly tax payable. It should be paid in the year in which the income is earned. In other words, it is ‘Pay as You Earn’ approach. Income can be earned from many sources like salary, interest, rent received etc.

Who pays Advance tax?
Business and self employed professions have to pay advance taxes. If you are working under someone and getting salary for your work, Tax is deducted in the form of ‘TDS’ from salaries, such assessee is not liable to pay advance tax. However, if income from other sources exceeds Rs. 10,000. You will need to apply for advance tax for such income.

Exemptions from payment of advance tax
A senior resident (60 years of age or above) who does not have any income chargeable under the head PGBP. An assessee who has opted a scheme under section 44AD.

Due dates for payment of tax
An assessee is liable to pay the installments of tax on or before the following dates:

Due date Corporate Assessee (company) Non Corporate Assessee
Upto 15th June 15% of tax Not applicable
Upto 15th September 45% of tax 30% of tax
Upto 15th December 75% of the tax 60% of the tax
Upto 15th march 100% of the tax 100% of the tax
 

For Assessment year 2016-17, due dates of advance payment of tax has changed and is same for both corporate assesses and non-corporate assesses

Due Date Tax payable
Upto 15th june 15% of the tax
Upto 15th September 45% of the tax
Upto 15th December 75% of the tax
Upto 15th march 100% of the tax
 

Due dates of Filling Income tax return

Dates Categories
31st July For individuals
30th September For Companies
30th September For individuals who need to get accounts audited
30th september For firms that require accounts to be audited
 

 

What if you fail to pay taxes even after the due dates?
If an assessee fails to pay tax on or before the due date, he is liable to pay interest along the installment. If he fails to file the return on tax, he becomes liable to pay penalty.

PENALTY OF LATE FILING OF INCOME TAX RETURN
Return can be filed at any time before 1 year from the end of relevant assessment year, so if the income is earned in the previous year 2015-2016. The returns should be filed before 31st march 2018. If an assessee fails to file the return on or before the due date. He/she would be liable to pay penalty of Rs. 5000 under section 271F.

 

INTEREST ON LATE ADVANCE TAX PAYMENT
Assessee becomes liable to pay interest if he fails to pay tax installment on/before due date. Such tax is attracted under sections 234A, 234B, and 234C as follows:

 

Interest under section 234A: Default in Furnishing the return of income:
Interest at 1% for each month the assessee delays the payment of tax as per the schedule mentioned above. The calculation begins from the due date to the date of furnishing of return.

 

Interest under section 234B:  Default in late payment of tax:
If the tax already paid by the assessee in the financial year is less than 90% after 31st march, he is liable to pay interest at 1% chargeable from 1st April of the assessment year to the date of completion of total income tax under section 143(1).

 

Interest under section 234C:  Deferment of advance tax.
Such interest is applied when tax is paid in underestimated installment or not paid at all. Interest is calculated on the amount not paid @ 1% for 3 months.

If such deferment is after 15th march, such interest will be charged at 1% per month.

For any help on ITR Filing feel free to consult the tax experts at Taxraahi. You can file ITR yourself via our ITR software or get CA’s help on filing income tax return. You can also use the option of Business Return, Bulk Return or Revised Return Filing.

 

Should keep in mind the following points-

Any payment of advance tax made on or before March 31 shall also be treated as advance tax paid during financial year.

Deduction under Chapter VIA is allowable while computing liability of advance tax.

TDS is to be reduced from total tax liability of assessee and then specified percentage be calculated for advance tax.

Advance tax is also applicable on both Non-Resident Indian (NRI) and a Non Resident if they have any income accrue during the year in India.

If the last day for payment of any installment of advance tax is a day on which the receiving bank is closed, the assessee can make the payment on the next immediately following working day, and in such cases, the mandatory interest leviable under sections 234B and 234C would not be charged.

Exception for depositing Advance Tax- Resident individuals who are over 60 years of age and do not have income chargeable under the head ‘Profits and Gains of Business or Profession' are not required to pay advance tax. For Individuals with salary as sole source of income, advance tax would be taken care by the TDS deducted by the employer at the time of payment of salaries as reflected in Form 16 and thus there would hardly be any advance tax payable.

Mode of Payment- Advance Tax to be paid on Challan No. /ITNS 280 by selecting 100 in type of payment.

It can be deposited either through cash, cheque, and electronic mode (Debit Card/Credit Card) at all branches of banks, which are empaneled with the Income Tax Department. An assessee can also pay advance tax through online banking etc. For Example- How to Compute Advance Tax Liability for the Financial year 2017-18 Answer: The Computation of Tax Liability on imaginary figures is as under: Particulars Amount Income from salary 2,40,000 Income from house property (Net out of Repair & Maintenance) 4,20,000 Profits and gains of business or profession 1,35,000 Income from other sources 105,000 Gross Total Income 9,00,000 Less :Deductions under Chapter VI-A 1,40,000 Total Taxable Income 7,60,000 Tax on total income at applicable rates 64,500 Less : rebate under section 87-A - Tax Liability After Rebate 64,500 Add: Surcharge - Tax Liability After Surcharge 64,500 Add: Education cess @3% 1,935 Tax liability for the year 66,435 Less: TDS 6,435 Tax payable 60,000 Advance Tax at specified rates to be deposited as below - On or before 15th Jun. Up to 15% of 60,000= 9,000 On or before 15th Sept. Up to 45% of 60,000= 27,000 On or before 15th Dec. Up to 75% of 60,000= 45,000 On or before 15th Mar. 100% = 60,000 Interest on late payment of Advance Tax? Interest u/s 234C- Interest @1% p.m. for a period of 3 months, will be payable for every deferment, except for the last installment of 15th March where it will be 1% for one month is payable if the tax is not paid as per the due dates i.e. for Deferment in Installments of Advance Tax. Interest u/s 234B- Interest @1% p.m. from 1st day of assessment year up to date of deposit tax & interest is payable if 90% of the assessed tax is not paid or is short paid before the end of the financial year i.e. for Default in Payment of Advance Tax. Calculation on the basis of above example, Interest is calculated as under- Interest under section 234C- Particulars Advance Tax due Advance Tax paid Shortfall Interest u/s 234C Up to 15th Jun. 9,000 5,000 4,000 120 Up to 15th Sep. 27,000 15,000 12,000 360 Up to 15th Dec. 45,000 25,000 20,000 600 Up to 15th Mar. 60,000 35,000 25,000 250 Total Interest under section 234C is Rs. 1,330/- Interest under section 234B- Consider the above example: Interest under section 234B for failure to pay 90% of the assessed tax before 31st March. As the above shortfall has paid 25,000 on 15th July, interest under section 234B @ 1% per month will be levied for 4 months (i.e. April to July). Interest under section 234B will be Rs. 1,000/- i.e. (25,000 x 1% x 4). Total interest payable under section 234B & 234C is Rs. 2,330 (1,330+1,000).