Short Note on Concept of Advance Tax
- Liability for payment of Advance Tax:-
Sec 207 (1) :- Tax shall be payable in Advance during the F Y in accordance with the provision of sec 208-219 in respect of the total income of the assesse which would be chargeable to tax.
Sec 207 (2):- w.e.f 01.04.2012 the above subsection is not applicable to an individual resident in India who:
- Does noy have any income chargeable under the head “Profits and gains of business or profession” and
- Is of the age of sixty years or more at any time during the previous year.
2. When the advance tax liability arise:
Advance tax liability arises when the projected total income of an assessee exceeds the emption limit and tax liability exceeds Rs.10, 000.
3. Due dates and Installments of advance tax :-
|
Due dates
|
For Corporate Assessee
|
For Non-Corporate Assessee
|
|
On or before June 15th of the previous year |
Up to 15 % of advance tax payable |
-------- |
|
On or before September |
Up to 45 % of advance tax payable
|
Up to 30 % of advance tax payable |
|
On or before December |
Up to 75 % of advance tax payable
|
Up to 60 % of advance tax payable |
|
On or before March 15th |
Up to 100 % of advance tax payable
|
Up to 100 % of advance tax payable
|
Apart from above, any income tax payment made on or before 31st March of the previous year also treated as advance tax.
4. TDS/TCS need to be considered:
While calculating the percentage of advance tax payment as per the above table, we shall consider the tax deductible or collectible at source and need to deduct the TDS/TCS from the assessed tax.
5. How the advance payment can be made:
Advance tax payment can be deposited through challan no.280 in banks. But all corporate assessee and the assessee those are subject to compulsory audit u/s.44AB need to deposit tax through electronic payment mode as per department circular no.5/2008 dated: 17.7.2008.
6. Specific exemption from payment of advance tax:
An assessee who opted for the scheme of computing business income u/s.44AD on presumptive basis at the rate of 8% of turnover, shall be exempted from the payment of advance tax related to such business with effect from assessment year 2011-12.
7. Consequences for nonpayment of Advance tax:
Interest will attract as per section 234A for default of payment of advance tax as follows:
|
Section |
Amount on which Interest is applicable |
Nature of Default |
Interest Rate |
Period |
|
234B |
Assessed Tax |
Failed to pay advance tax |
Simple Interest @ 1% p.m. or part of the month |
From 1st April of Asst. year to the date of determination of income u/s 143 (1) and where a regular asst. is made to the date of such asst. |
|
234B |
Assessed Tax |
Advance tax paid is less than 90% of the assessed tax |
Simple Interest @ 1% p.m. or part of the month |
From 1st April of Asst. year to the date of determination of income u/s 143 (1) and where a regular asst. is made to the date of such asst. |
|
234C |
Tax due in returned Income |
Advance tax paid is less than the % mentioned in the table at point no.2 |
Simple Interest @ 1% p.m. or part of the month |
Three months except in the case of last Installment where the period will be One month. |
In case of the Company there won’t be any Interest applicable on shortfall of advance tax for installment due on 15th June and15th September if the % of advance tax paid is not less than 12% and 36% respectively.
I am also attaching the Excel Sheet for calculation of Interest on Advance Tax.
Thanks
CA Manish Malu
CAclubindia
