Advance Tax

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If you start a business part-way through the financial year, you may incur advance tax liability. While advance tax is typically paid in quarterly instalments, starting late means interest could be calculated on earlier periods. The key is to correctly declare your business commencement date in your tax return to potentially avoid interest, except for the final quarter. This applies differently to individuals versus other entities like companies or firms, with specific rules for capital gains.

swasti

swasti (Querist)

17 January 2020 If the business starts from 1st January and has a good profit / income, what about the Advance Tax Liability? As the advance tax would be paid in the 4th Qtr only and the system would calculate Interest for the first 3 instalments also. How to proceed in such a case? Kindly suggest.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

17 January 2020 In the return form, date of commencement of business is called for. Fill up that to
avoid interest except of last quarter.

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PARAS CHHAJED

PARAS CHHAJED

(Expert)

17 January 2020 If you are other than an Individual i.e. HUF, Company, Firm, AOP and the business is carried on immediately after formation of such entity then you may save interest u/s 234C else if the date of formation of the entity is in the preceding year then interest u/s 234C shall have to be paid for all installments. The condition of charging interest u/s 234C on installments falling due after date of sale of capital assets applies only for Capital Gains..

swasti

swasti (Querist)

18 January 2020 Thanks a lot Chackrapani Sir and Paras Sir for the expert suggestions.

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