Aspect of Advance Tax – Provisions, Applicability and Computation

It is easier on the part of the Income Tax Department to collect taxes at regular intervals and proceed for processing of refunds only when Income Tax Return is filed by the taxpayer. To reduce the compliance burden on the taxpayer, the department came up with the concept of Advance Tax.

Advance Tax 

The provisions of advance tax are stated under Section 208 of the Income Tax Act, 1961 where every assessee whose estimated tax liability for the previous year is Rs 10,000 or more is required to make payment of advance tax to the government.

Advance tax is to be paid by every individual/HUF/ Company/Trust/ Body of Individuals /Association in case the tax liability reaches Rs 10,000 or exceeds Rs 10,000.

As per IT Act, 1961, the exemption is provided in any of the following cases from payment of advance tax :

  • Where the taxpayer is more than 60 years old i.e., is under the category of Senior citizens  and receiving business income; or
  • Where the tax liability of the person is below Rs 10,000; or
  • Where the taxpayer is a salaried employee and TDS has already been deducted every month from his salary account.

Calculation of Advance tax

By Individuals / HUF/ Companies/ Associations

ParticularsAmount
Income from Business / Profession/ SalaryXXX
Add:  Income from House PropertyXXX
Add:  Income from Capital gains and other sourcesXXX
Less:  Deductions and Exemptions(XXX)
Net  taxable incomeXXXX
Income tax on Net Taxable IncomeXXX
Add: Surcharge and Cess applicableXXX
Total Tax LiabilityXXX
Less: Rebate (u/s 87A or other as applicable)(XXX)
Less: TDS/TCS amount prepaid(XXX)
Advance tax payableXXX

Due Dates for Payment of Advance Tax

For Individuals / HUF/ Companies/ Associations

Due date of installmentAmount payable
On or Before 15th  June15% of the tax liability
On or Before 15th  September45% of the tax liability
On or Before 15th  December75% of the tax liability
On or Before 15th  March100%  of the tax liability

For Assessee Computing profits under presumptive  basis under Section 44AD(1) or Section 44ADA(1)

Due date of installmentAmount payable
On or Before 15th  March100%  of the tax liability

Things to Know About Advance Tax 

  • Calculation of advance tax is just like calculation of normal Income Tax which is paid at the end of the year. So, all necessary expenses like depreciation, remunerations or commissions paid in case of business income and expenses made for medical expenses or income on which TDS has been deducted in all have to be deducted while calculating Advance Tax.
  • If advance tax is to be paid on receipt of an order under Section 210(3)from the assessing officer, and in case the calculation of advance tax is lower then what is computed by the assessing officer, then the taxpayer has to file a response to the officer.
  • Even after making payment of first or second or third installment of advance tax, if there is any change in the tax liability of the taxpayer he can further revise his advance tax and pay the required tax amount or excess is paid can claim for refund at the time of filing of the Income Tax Return.
  • As stated in Rule 125of the Income Tax Rules, 1962, corporate taxpayers shall only use electronic payment mode or internet banking facility while making payment of advance tax. While individual taxpayers can pay advance tax in any of the payment modes such as by making physical payment filing the Challan at the bank or electronically.

Filing Advance Tax Online 

  1. Go to https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp.
  2. Select Challan number 280for payment of Advance Tax.
  3. Enter the required details; PAN number and select Advance taxas type of payment and click on “Proceed”.
  4. Make payment with available payment modes.
  5. Download the payment receipt as shown on the screen for future references.

Penal Consequences for Non- Filing of Advance Tax

It is mandatory for the entities and individuals to pay Advance Tax if tax liability estimated is above Rs 10,000. In case of any delay, penal interest under Section 234 C and Section 234 B shall be charged@ 1% at the simple interest which will be charged for the required number of months following the due date of advance tax payment till the advance tax is paid.

For instance, a shortfall in payment of advance tax payable on 15 December interest @ 1% shall be charged for 3 months to 31st March in the same financial year for which the advance tax was to be paid.

File your advance tax with Taxreturnwala.com

Hassle-free!

Also Read: Private Security Agency License