re:advance tax
This query is : Resolved
16 December 2009
we are a properitor firm. i want to know,what is advance tax & how it is calculated.
Guest
Guest
(Expert)
17 December 2009
ADVANCE INCOME TAX
Obligation to pay Advance Tax - sec. 210
Apart from making provisions for deduction of tax at source on various income based upon quantum of income, the Indian Income-tax Act makes it compulsory for every person liable to pay tax in India, to pay Income-tax in advance on the income of the current financial year. However no such advance tax is payable unless the tax payable is Rs. 5000/- or more after deducting the tax deducted at source from the gross tax payable on the current income.
PAYMENT OF ADVNCE TAX ON THE ESTIMATED TAXABLE INCOME BY ALL ASSESSEE
(Other than companies)
Installment Percentage Due Date
First
Second
Final 30%
30%
40% 15th September
15th December
15th March
Eg.: If an Assessee’s estimated tax payable for the full year is Rs.10,000 , he has to pay an Advance Tax of Rs.3,000 each in 1st & 2nd Installment & Rs. 4,000 in Final Installment.
• No Advance Tax need to be paid, if total tax payable for the year is less than Rs. 5,000.
• When employer deducts tax from Salary, employee need not pay Advance Tax.
• Non-payment or short payment of Advance Tax will attract penal interest.
Advance Tax Example :
Mr. Sanjay estimates his income for the year 2007-2008 as on
1.9.2006.
Details :
• Business Income 2,50,000
• Interest from Bank & NSC 15,000
• PPF Contribution 4,000
• Life Insurance Premium 6,000
• ELSS 10,000
• TDS on Interest 1,100
Solutions :
Taxable Income : (1&2) Rs. 2,50,000 + 15,000 = 2,65,000
(3 to 5) Rs. 4000, 6000, 10000 = (-) 20,000
= 2,45,000
Tax on 2,45,000 including EDU Cess @2% 24,480
Less : TDS on Interest 1,100
Total Tax Payable 23,280
Installment of Advance Tax Payable
1 st. - 30% on 23,380 payable on 15/09/06 7,014
2 nd. - 30% on 23,380 payable on 15/12/06 7,014
3 rd. - 40% on 23,380 payable on 15/03/07 9,352
Interest for short or non-payment of Advance Tax - sec.234B
(b) If no advance tax is paid at all or if the aggregate of the tax paid by 31st March of the current financial year is less than ninety percent of tax determined as payable by the tax payer on completion of the assessment then interest @ 2% p.m. and at 1½% from 1-6-1999 is charged on the deficit amount from 1st April of the following year upto the date of the assessment.
In the example given under (a) above, if the net tax payable on assessment is increased to Rs. 11000/- then interest will be payable under (b) above since the total tax paid is Rs. 9500/- which is less than 90% of Rs. 11000/- which will be Rs.9900/-.Interest payable will be 2% p.m.on Rs. 1500/- (Rs.11000-9500) and it will be payable from 1-4-1996 till the date of completion of the assessment.
[In addition to interest payable as refered to above, for deferment of advance tax and for non or short payment of advance tax, interest is also payable for non-filing or delayed filing of return of income. (Sec. 234A) ]
Obligation to pay Advance Tax - sec. 210
Apart from making provisions for deduction of tax at source on various income based upon quantum of income, the Indian Income-tax Act makes it compulsory for every person liable to pay tax in India, to pay Income-tax in advance on the income of the current financial year. However no such advance tax is payable unless the tax payable is Rs. 5000/- or more after deducting the tax deducted at source from the gross tax payable on the current income.
PAYMENT OF ADVNCE TAX ON THE ESTIMATED TAXABLE INCOME BY ALL ASSESSEE
(Other than companies)
Installment Percentage Due Date
First
Second
Final 30%
30%
40% 15th September
15th December
15th March
Eg.: If an Assessee’s estimated tax payable for the full year is Rs.10,000 , he has to pay an Advance Tax of Rs.3,000 each in 1st & 2nd Installment & Rs. 4,000 in Final Installment.
• No Advance Tax need to be paid, if total tax payable for the year is less than Rs. 5,000.
• When employer deducts tax from Salary, employee need not pay Advance Tax.
• Non-payment or short payment of Advance Tax will attract penal interest.
Advance Tax Example :
Mr. Sanjay estimates his income for the year 2007-2008 as on
1.9.2006.
Details :
• Business Income 2,50,000
• Interest from Bank & NSC 15,000
• PPF Contribution 4,000
• Life Insurance Premium 6,000
• ELSS 10,000
• TDS on Interest 1,100
Solutions :
Taxable Income : (1&2) Rs. 2,50,000 + 15,000 = 2,65,000
(3 to 5) Rs. 4000, 6000, 10000 = (-) 20,000
= 2,45,000
Tax on 2,45,000 including EDU Cess @2% 24,480
Less : TDS on Interest 1,100
Total Tax Payable 23,280
Installment of Advance Tax Payable
1 st. - 30% on 23,380 payable on 15/09/06 7,014
2 nd. - 30% on 23,380 payable on 15/12/06 7,014
3 rd. - 40% on 23,380 payable on 15/03/07 9,352
Interest for short or non-payment of Advance Tax - sec.234B
(b) If no advance tax is paid at all or if the aggregate of the tax paid by 31st March of the current financial year is less than ninety percent of tax determined as payable by the tax payer on completion of the assessment then interest @ 2% p.m. and at 1½% from 1-6-1999 is charged on the deficit amount from 1st April of the following year upto the date of the assessment.
In the example given under (a) above, if the net tax payable on assessment is increased to Rs. 11000/- then interest will be payable under (b) above since the total tax paid is Rs. 9500/- which is less than 90% of Rs. 11000/- which will be Rs.9900/-.Interest payable will be 2% p.m.on Rs. 1500/- (Rs.11000-9500) and it will be payable from 1-4-1996 till the date of completion of the assessment.
[In addition to interest payable as refered to above, for deferment of advance tax and for non or short payment of advance tax, interest is also payable for non-filing or delayed filing of return of income. (Sec. 234A) ]
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