Playlist - How to pay advance , demand , self assessment tax - A practical Perspective ! Video Link - https://youtube/watch?v=NljgGQCQjnY Case Methodology - Harvard Case Model By - Amlan Dutta Let the previous year be 2013 14 .....Amlan , a resident non senior individual has income from salary 10 lakhs and FD interest income 1 lakh .....he also done a providend fund investment of 1 Lakh Rupees under section 80 C ..... So , he files return ITR 1, he declares income under respective heads showing income of 10 lakhs ....Now as per slab based taxation , tax applicable is 0 - 2 lakhs - Nil , 2-5 lakhs - 10 % , 5- 10 l;akhs - 20 5 , above 10 lakhs - 30 % , he is liable fo r a tax liability of 133000 Rs ...... Now , employer has deducted tax on 9 lakhs salary credit (10 - 1 ) as per slabs i.e 110000 Rs +3300(edu cess )=113300 under section 192 doing salary TDS Bank has deducted 10 % on FD interest income i.e 10000 Rs under section 194 A doing Interest other than securities TDS So , Amlan has TDS credit of salary TDS of 113300 plus non salary TDS of 10000 =123300 Rs available to him ...... Consider two cases Case 1 - Amlan Pays advance tax During the year itself , amlan is aware that the tax liability on his total income is 133900 wheread TDS credit available to him is 123300 Rs. So , he has to pay the difference (133900-123300 =10600 Rs in advance before the financial year ends Department has laid out that 30 % by 15th September , 60 % by 15Th December and 100 % of 10600 Rs should be paid by 15th March 2014 i.e before financial year ends So , Amlan not wanting to take risk pays whole 100 % i.e 10600 Rs before 15th september itself using challan 280 , details of which he shows in tax return under schedule IT mentioning Bank BSR code Challan receipt number , date and amount This is important because sum total of TDS pus self assessment as depicted in the return now equal the tax liability arising on total income as per slabs Case 2 - Amlan pays self assessment tax Say , Amlan Pays no advance tax ....now the day when he decides to file return i.e say on 17 th July , what this means is his non payment of taxes arising on income during the year is resulting in loss of revenue in time to the department ...if the revenue had this money , they would have earnt interest The mere fact that amlan has not paid in time therefore must surely tantamount to interest on account of delay and thus are born penal interest sections 234 B and 234 C Of this 234 B is penal interest starting from end of the year till the date payment is finally made ..it is 1 % of unpaid taxes per month 234 C is penal interest against underpaid installment of advance taxes due in the months of September , December and finally march and again at the same rate of 1 % of unpaid underpaid installment for 3 ,3 and 1 month respectively ! Now , amlan when he pays in 17Th July will have to bear interest under section 234 B and 234 C on the unpaid taxes component i.e 10600 Rs ...say the penal interest is x Rs ....so , the unpaid taxes is 10600 + x rs ( return computes this automatically ) He again pays using challan 280 this amount and again claims credit of such self assessment taxes paid in return such that sum total of TDS credit plus self assessment taxes paid equal to tax liability on total income ! Only then shall be upload return online! Now lets proceed , Amlan uploads return ITR 1 , gets a acknowledgement ITR V...he sends this acknowledgement to the department ...department sends the return that has been uploaded to amlans assessing officer Chaturvedi ITO WD(23(1) charni road ..The assessing officer selects amlans case for scrutiny assessment and sends him a notice under section 143(2) intitially and later under 142(1) seeking from amlan documents to support return of filing of return ITR 1 for assessment year 2014 15 ! Total income - Amlan carries form 16 to support salary incoem , FD statement to show FD interest income and PF certificate to show deductions under chapter VI A to arrive at his total income which he declared in his tax return. Tax Credit - For Tax credit , he shows his tax credit statement 26 AS to show AO TDS credit available to him against salary and FD interest done by deductors against his income and also the self assessment tax that he paid neatly forming a part of the 26 AS credit statement ! AO officer asks for bank statement ...it is then that he observes that Amlan has savings interest from bank for 12000 Rs ...he asks amlan why has this not been declared ...Amlan says that he is entitle to deduction under section 80 TTA for 10000 Rs and he thought bank had deducted tax as applicable on it already !assessing officer disagreess and raises demand under section 156 ! Amlan pays that demand using challan 280 --he doesnt need to take credit of this and revise or rectify return ...a mere intimation to the assessing officer is enough !
Posted on: Fri, 09 Jan 2015 07:06:43 +0000
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