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Income tax

chetan (accountant) (321 Points)

30 April 2011

What is the condition to pay advance tax. it means can individual pay the advance tax. or there is any liability if he not paid the same.

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5 Replies

Pradip Narsingani (Income Tax & GST Consultant/ CA-Final) (572 Points)
Replied 30 April 2011

Section 208. Conditions of liability to pay advance tax:

Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is Rs. 5000/- or more.
(i) Advance tax to be paid on or before 15 September is 30% of tax due,
(ii) Advance tax to be paid on or before 15 December is 60% of tax due,
(iii) Advance tax to be paid on or before 15 March is 100% of tax due.

Section 234B. Interest for defaults in payment of advance tax
Where, an assessee who is liable to pay advance tax has failed to pay such tax or, where the advance tax paid by such assessee is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of 1 % for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143,
and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax.

Section 234C. Interest for Deferment of Advance Tax
For other than a company. If an assessee has failed to pay advance tax under section 208 or
(i) Advance tax paid on or before 15 September is less than 30% of tax due, on the shortfall interest is payable at 1 per cent per month for three months,
(ii) Advance tax paid on or before 15 December is less than 60% of tax due, on the shortfall interest is payable at one per cent per month for three months, and
(iii) Advance tax paid on or before 15 March is less than 100% of tax due, on the shortfall interest is payable at one per cent per month for period till the tax is paid.

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Shriram Ramachandran (IPCC Student CWA Inter & Processing officer in GNSA Infotech Ltd) (492 Points)
Replied 01 May 2011

Meaning of Advance Tax

Payment of Advance Tax on estimated Income during the current year is required to pay for all assesses. As example, In the Financial Year 2010-11 (Assessment Year 2011-12) advance tax is payable in installments during the period 01.04.2010 to 31.03.2011 itself. The total amount of Advance Tax will be adjusted during the Assessment Year 2011-12 at the time of assessment.

Who is liable to Pay Advance Tax

1) Advance Tax is required to pay under section 208 of Income Tax Act 1961 for all those assesses including Salaried and Pensioners whose advance tax on estimated income comes (after deducted TDS/TCS if any) to Rs. 10,000/- or more in a Financial Year F.Y. 2010-11.

Thus, if Income Tax payable (after deducting all deductions, rebates and TDS) is less than 10000 in a financial year 2010-11, there is no need to deposit any Advance Tax and the same tax will be deposited at the time of self assessment before filing of income tax return.

2) In case an order u/s 210(3) is received by the person to pay an amount by way of Advance Tax in Form No. 28, should deposit such amount in the installments as specified in the order. This type of orders can be issued upto the last day of February of the Financial year.

If that person estimates his income at a higher amount than that specified in the orders u/s 210(3), then he should pay advance tax in accordance with such higher estimate.

However under sections 210(4) & (5) of Income Tax Act 1961, if he estimates him income at a lower amount, then he should send an estimate of such lower income in Form28-A, before the next installment falls due and deposit the remaining installments of advance tax accordingly.

Dues dates and Installments of Advance Tax

Installment Number and Due Date	For Other than Companies (Individuals, HUF,Partnership Firms and others)	For Companies (Limited or Private Companies)
1) 15^th Jun. 2) 15^th Sep. 3) 15^th Dec. 4) 15^th Mar. 5) 31^th Mar.	Nil 30% of Advance Tax 30% of Advance Tax 40% of Advance Tax Tax on Capital gains or casual incomes arising after 15^th March, if any	15% of Advance Fax 30% of Advance Tax 30% of Advance Tax 25% of Advance Tax Tax on Capital gains or casual incomes arising after 15^th March, if any
Notes: - 1) Any amount deposited by 31^st March, is treated as advance tax for that Financial Year. 2) If the last day of payment of any instalments of advance tax is a day on which the receiving bank is closed, the assessee can make the payment of the next immediately following working day, and in such cases, the mandatory interest leviable u/s 234B and 234C would not be charged vide CBDT’s circular No. 676 dated 14.01.1994.

Important Note for Salaried Tax-Payers :

Advance Tax is different from Tax Deducted at Source (TDS). In case of salaried people, normally tax is deducted at source from their salaries, by the employer. Their income for the year is estimated, tax calculated thereon and 1/12th of such estimated tax is deducted from their monthly salary bill.

Salaried persons are normally not required to pay advance tax. However, in case the tax liability estimated for the year is more than the TDS, then such employees shall be liable to pay advance tax as indicated above.

How to Calculate Advance Tax

Advance Tax is payable (in installments , as above) on total income (estimated for the Financial Year) including capital gains and casual incomes such as winning from lotteries races, etc and after adjusting expenses or losses.

Therefore, income for the current year should eb estimated as precisely and correctly as possible.
If any capital gain or casual income arises subsequent to payment of an installment , the remaining installments of advance tax should be accordingly revised. If any such income arises after 15the March, tax should be deposited on such incomes latest by 31st March of the Financial Year.
Remember, non/short payment and deferment of Advance Tax attracts penal interest.

Rates of Advance Tax

Rates of Advance Tax are declared in the Finance Act every year. The rates of advance tax shown in above are as per Finance Act 2010.

How to Deposit Advance Tax

Advance Tax can be deposited through Challan No. 280 in the Government Treasury (RBI) or any of of the authorised branches of nationalised banks. Printed challan forms are available with the Income Tax Office free of cost. While filing challan the following fields are required to be filed.

Assessee's Name
Complete Address of Assessee.
Permanent Account Number
Assessment Year
Assessing Officer's Ward or Circle
Amount of Advance Tax, Surcharge and Cess (if any).

Online deposit of Advance Tax is best payment method. When we deposit or pay online Advance Tax, there is no need to collect Physical Challan No. 280 or no need to stand in big rows to deposit advance tax in banks or treasury etc. For online Tax payment.

Thanks

R Shriram

Nitin Grover (CS) (1228 Points)
Replied 01 May 2011

Dear Chetan

Anybody can pay Advance Tax. Advance tax is similiar to pay tax the only diffrence is In Advance Tax we have to pay tax before ending of Financial Year
.

Now any assesse is liable to Pay Tax Rs, 10,000 or more in a year must have to Pay Advance Tax. (previously limit was Rs. 5000).

Dues dates and Installments of Advance Tax

Installment Number and Due Date	For Other than Companies (Individuals, HUF,Partnership Firms and others)	For Companies (Limited or Private Companies)
1) 15^th Jun. 2) 15^th Sep. 3) 15^th Dec. 4) 15^th Mar.	Nil 30% of Tax 30% of Tax 40% of Tax	15% of Tax 30% of Tax 30% of Tax 25% of Tax

Regards

BHUSHAN (DADSD) (22 Points)
Replied 02 May 2011

I WANT TO SALARY PROCEDURE FORMAT IN EXCEL 2011-12

kaveendra (Accouts executive) (36 Points)
Replied 02 May 2011

Dear Sir,s

Requested to help or resolve the query for taxes(Sales, TDS) as per below mention: -

Suppose there are two vendors A & B

A have restaurants (FOOD) business at different different palaces.

B have a mall and invites to A to open the restaurant in B’s Mall in Delhi

Suppose A raised a bill for the whole day sale on daily basis as per below : -

Total sales : - Rs. 1000.00

VAT on sales : - 120.00

Gross Sales : - 1120.00

But B charges 10% margin on above amount sales from the customers as per below : -

Total Sales : - Rs. 1000.00

Add Margin : - 100.00 ( @ 10%)

Net sales : - 1100.00

Vat on sales : - 137.50 ( @ 12.5%)

Gross sales : - 1237.50 for B.

In the above case is there any liability for TDS For A. (Because A sales food material on A’s brand name at B’s Palace and B charges 10% margin amount.