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Advance tax query

20 February 2016

Hello everyone!

Will the person be liable for advance tax if TDS on salary & TDS on FD is deducted?

My client as received an Intimation u/s 143 regarding the same. The software has not taken Interest under 234B & 234C, & we have received the intimation stating that he is liable for interest under 234B & 234C & tax demand is raised for the same.

Please solve my query at the earliest.

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11 Replies

Shivani Mittal (Practice) (425 Points)
Replied 20 February 2016

Liability to pay advance tax will arise if tax liability after adjusting TDS is more that Rs. 10,000/-.

I believe by Sec 143 you mean Sec 143(1). Such demand has to be paid else it will be adjusted by means of Sec 245 in future years.

Regards

CA Shivani Mittal

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CA Vinit Malani (.) (49 Points)
Replied 20 February 2016

Thank for your reply Mam.

But the provision also states that 90% should be paid, as our TDS deducted is more than 90%, are we still liable to pay Interest u/s 234B & 234C ?

Shivani Mittal (Practice) (425 Points)
Replied 20 February 2016

Clause of 90% payment is for interest u/s 234B which has a prerequisite of libality to pay advance tax.

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CA Vinit Malani (.) (49 Points)
Replied 20 February 2016

Thank You Mam.

It means that we need to pay the demand rasied & we are liable for both 234B & 234C?

Isn't it mam?

Shivani Mittal (Practice) (425 Points)
Replied 20 February 2016

Steps to be considreed :

Check tax payable net of TDS.
If net tax payable as per point 1 exceeds Rs 10,000/-, advance tax liability arises. Hence, interest u/s 234C.
Check if total tax paid is >= 90% of total tax libility.
If yes, interest u/s 234B will be levied
If no, interest u/s 234B cannot be levied.

If it is a case of point 5 and still interest u/s 234B is levied, then raise an objection.

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CA GOKUL RAJ R (Chartered Accountant) (151 Points)
Replied 20 February 2016

Dear Vinit Malani,

If the entire tax liability has been deducted by means of TDS, then no interest shall be levied.

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CA Vinit Malani (.) (49 Points)
Replied 22 February 2016

Respected Shivani Mam,

You mean to say that if TDS deducted is more than 90% of tax liability, then interest U/s 234B is not to be levied right?

In the intimation notice, interest u/s 234B is also levied & wereas the TDS deducted is more than 90% of Tax Liability.

Thus Interest u/s 234B is not to be levied.

CA Vinit Malani (.) (49 Points)
Replied 26 February 2016

Respected Mam,

My assessee has filled Return u/s 44AD. Thus both the Interest will be not be liable right?

Shivani Mittal (Practice) (425 Points)
Replied 27 February 2016

Yes
Asseessee opting for Sec 44AD are not liable to pay advance tax. Hence, no interest u/s 234C & 234B.

Rohit Goyal (Financial and Taxation Consultant) (206 Points)
Replied 04 March 2016

Hi, I have created a Income Tax Calculator having for Salary Income, House Property Income and Other Sources Income

Deductions under Chapter VI-A (with detailed explanations)

Including effect of Agricultural Income, Surcharge

And also Advance Tax, Interest u/s 234A,B & C,

And also effect of TDS ans TCS thereon.

You just have to input data in it and you will get your answer. Kindly, download it from following link:

https://files.acrobat.com/a/preview/2b34260e-5ed9-467e-96fb-d8167ceba66b

Thanks & Regards

Rohit Goyal

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Rohit Goyal (Financial and Taxation Consultant) (206 Points)
Replied 04 March 2016

Dear Friend, there was some issues in Income Tax Calculator with compatibility with Office 2007 (as I was using Office 2013), so I have upgrated the Income Tax Calculator and New Version is now available to download and if you think its usefull, share it with your friends also. Kindly download it from following link:

https://files.acrobat.com/a/preview/329d48a4-59ba-495d-8ce0-e9638e74c96c

Thanks & Regards

Rohit Goyal