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Notes on Advance Tax.


Steady flow of tax revenue to government exchequer without waiting for actual crystallization of tax liability.

When tax liability of current estimated income exceeds the specified limit, then assessee required to pay estimated tax in installments during financial year itself.

Who is liable to Pay

Every assessee whose estimated tax liability,which is calculated on estimated current taxable income, is Rs 10,000 or more , irrespective of his residential status.

Note:-

 Resident individual whose income is not chargeable under PGBP & whose age is 60 years or more at any time during previous year, is not required to pay Advance Tax.

How To Compute

Every income is subject to advance tax, even if such income is subject to TDS or subject to any special rate of tax.

Estimated Gross total income                    xxx

Less: Deduction under chapter VI-A         xxx

Net estimated total income                        xxx

Tax on above                                                 xxx

Less rebate u/s 87A                                     xxx

Tax after rebate                                            xxx

Add Surcharge                                             xxx

Add Health & education cess                    xxx

Gross Tax Liablity                                       xxx

Less Mat Credit                                          xxx

Less Tax relief u/s 89                                xxx

Less Foreign tax credit                              xxx

Net Tax Liablity                                          xxx

Less Prepaid Tax/TDS/TCS                    xxx

Total Advance tax liablity                         xxx

Any part of rupees consisting of paisa is ignored.

 Due Date of Payment

Due Date for payment of advance tax

Advance to be payable

On or before 15th June of previous year

Min 15% of Advance Tax

On or before 15thSeptember of previous year

Min 45% of Advance Tax

On or before 15thDecember of previous year

Min 75% of Advance Tax

On or before 15thMarch of previous year

100 % of Advance Tax.

If assessee falls under section 44AD / 44ADA , then he is not liable to discharge advance tax liablity on quarterly basis, he should discharge his whole advance tax liablity on or before 15th march of previous year in single installment.

Any tax paid on or before 31st march of previous year is treated as Advance Tax.

If an assessee is paid excess advance tax in any of quarter, then he may adjust such excess advance tax paid in subsequent quarter.

Advance tax paid either online or offline by submitting the details in challan no-280, however w.e.f 01st April 2008, it is mandatory for a company or a person who is required to get his account audited under section 44AB to pay taxes through online mode.

CBDT clarified it is not mandatory for an assessee to make payment of taxes through own account, he may make payment through any other person account.

If assessee fails to make payment of advance tax then he is liable to pay following interest.

·       Interest u/s 234B (default in payment of Advance Tax)

·       Interest u/s 234C ( For deferment of payment of Advance Tax)

AO may serve notice of demand in form no-28, requiring him to pay advance tax , if such person fails to pay advance tax on self-assessment basis.

He may issue such notice on or before last day of February of the relevant financial year.

Assessee may send intimation in form 28A and pay advance tax accordingly, non-payment of advance tax will be treated assessee in default.

Section 211:- If the last date for payment of any installment of advance tax is a holiday, then assessee can make payment on the next immediately following working day. The best tax consultant and TDS return consultants in Patna can guide you properly regarding Advance tax and TDS return in Patna and around Patna.

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