Advance Tax Provisions::: According to the Income Tax Act, assessees are required to pay tax in advance in a previous year if their tax liability for the year is likely to be Rs 10,000 or more. Advance tax is payable on the total income of an assessee that is chargeable to tax in an assessment year. Every income, including capital gains, casual income etc is liable to payment of advance tax. Advance tax is applicable to all those who have income in India, irrespective of their residential status . Tax on your salary will be deducted by your employer. If you have income from any other sources such as rental income, income from shares or bank interest, you will be responsible to pay the final schedule of advance tax. Failing to pay advance tax will attract interest which has to be paid while filing your tax returns. An assessee needs to approximate the tax liability for the previous year based on projected income, which is likely to accrue to him. An assessee has to compute tax on the estimated current income at the rate in force in the relevant previous year. The statement of estimated income need not be submitted to the income tax authorities while paying the advance tax. From the tax so computed, any tax deducted at source has to be subtracted. After paying the first installment of advance tax, an assessee can revise his estimate of current income. Assessees have to pay advance tax on such revised income in the remaining installments. Under the Income Tax Act, the total tax liability has to be paid in installments as advance tax on or before specified due dates. Credit is given to the assessee in respect of advance tax paid by him at the time of determining his final tax liability. Any remaining amount has to be paid as self-assessment tax before the income tax return is filed. If advance tax paid is in excess, it will be refunded to him. Payment of advance tax depends on the status of the assessee. The advance tax is to be paid in the following installments on the following dates: For Non-Corporate Assessee On or before 15 September – not less than 30% of tax payable for the year On or before 15 December – not less than 60% of tax payable for the year On or before 15 March – not less than 100% of tax payable for the year For Corporate Assessee On or before 15 June – not less than15% of tax payable for the year On or before 15 September – not less than 45% of tax payable for the year On or before 15 December – not less than 75% of tax payable for the year On or before 15 March – not less than 100% of tax payable for the year However, any payment of advance tax made before March 31 will be treated as advance tax paid during the financial year. If an assessee defaults on paying advance tax or if he fails to deposit the exact percentage of advance tax before the specified due dates, he is liable to pay penal interest under the Income Tax Act. According to Section 234B of the Act, interest is payable if an assessee who is liable to pay advance tax fails to pay it or if he pays less than 90 percent of the assessed tax (that is, tax on the total income declared by the assessee minus tax deducted at source). Simple interest at one percent for every month or part of the month is payable on assessed tax minus advance tax paid, if any, from April 1st of the following financial year to the date of determination of total income under Section 143(1), or the date of regular assessment, if it is made. For the purpose of calculation , any fraction of a month is deemed to be a full month. According to Section 234C of the Income Tax Act, interest is payable if an assessee has not paid advance tax or underestimated the advance tax due. In this case also, simple interest at one percent per month is payable on a specified amount for a specified period. In case the last day for payment of any installment is a holiday, the payment can be made on the next working day. In such a case, interest will not be charged. Interest is not levied for any shortfall in the payment of advance tax on account of underestimation or failure to estimate capital gains (short or long term) and casual income. An assessee should pay the entire tax payable in respect of such income in the remaining installments of advance tax which are due, or if no such installment is due, such tax should be paid before March 31 of the financial year. If despite a legal obligation on an assessee to pay advance tax he fails to do so, the assessing officer concerned may ask him to pay it on his current year’s income. Such an order must be passed during the financial year itself. It cannot be passed later than the last day of February. In case an assessee’s own estimate is less than this amount, he needs to inform the assessing officer. However, in case the assessee’s estimate is higher, no intimation needs to be made and the tax should be deposited.
Posted on: Tue, 18 Mar 2014 06:37:33 +0000
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