1. ADVANCE PAYMENT OF TAX
Liability for payment of Advance Tax Section207
Meaning of advance payment of tax
Meaning: We know that income earned during PY shall be charged to tax in AY But assessee is required to pay the liability of tax in advance, on the taxable income of the financial year during the same financial year itself. This can be done by way of Advance Tax. T.D.S. and TCS
PAY AS YOU EARN “PAYE” SCHEME: Thus Advance tax means the tax which paid in the year in which income is earned. i.e. earning of income & payment of at go simultaneously. This scheme also known as “PAY AS YOU EARN PAYE Any amount paid on or before 31 March of the relevant Previous Year is considered as Advance Tax.
(1)Due to Advance Tax government received constant flow of tax thorough the year rather than receiving all payment at the end of the year.
(2)Advance tax provision is applicable to all type of person Le salaried, self employed irrespective of residential status of the person
(3) All assessees are liable to pay advance tax on their total income of the relevant Previous year including winning from lotteries, cross-word puzzles and income from capital gains subject to following exceptions
(A) Resident Senior citizen who does not have any income from a business
would be exempted from payment of Advance Tax.
(B) Assessee who has opted for presumptive tax under section 44AD
(C) Advance tax payable is less than 10000 in the current financial Year
Condition of liability to pay Advance Tax (Section208):
As per Section 208 Liability to pay Advance Tax arises when tax liability of assessee is ? 10,000 Or more in financial Year.
Calculation of Advance Tax: As Actual income & tax is determined after completion of the year for payment of Advance tax assessee has to estimate his current income & pay tax on it. It doesn’t require submitting the estimates to Assessing officer.
Amount of Advance Tax Payable
| Amount of Advance Tax Payable | Amount |
| Tax on total income | XXXX |
| Less: Rebate and Relief | XXX |
| (Rebate u/s, 87A, if applicable) | |
| Add: Surcharge | XX |
| Add: EC & SHEC | XX |
| Gross Tax Liability | XXXX |
| Less ;TDS & TCS | XXX |
| Advance Tax Payable | XXXX |
Instalments & due date of Advance Tax (Amendments by Finance Act, 2016 effective from 1 June, 2016):
Till FY 2015-2016, the Individual assessee was allowed to pay 3 instalments of Advance Tax starting from 15 September of the FY, but due to the amendments made we.f June, 2016, now all assessee are required to pay 4 Instalments as under.
| Due date of Instalments | For corporate and Non Corporate Assessee i.e. All Assessee | Assessee who opted for presumptive taxation scheme of section 44AD or section 44ADA |
| On or before 15 June | Up to 15% of Advance tax payable | |
| On or before 15 September | Up to 45% of Advance tax payable Le additional 30% | |
| On or before 15 December | Up to 75% of Advance tax payablei.e. additional 30% | |
| On or before 15 March | Up to 100% of Advance tax payable Le. remaining 25% | 100% of Advance tax payable |
(1) The last date of payment of Advance Tax is 15 March. But if any amount is paid up to 31 March of the EY. this amount is also considered as Advance tax.
(2) If the due date of payment of tax is banking holiday, assessee can make the payment on immediately working day, in this case section 234B and 234C will not applicable.
(3) Assessee will be deemed to be an assessee in default if he doesn’t pay instalment on due date. (4) When payment is made by cheque, the presentation of cheque is considered date of payment if it were not dishonoured.
(5) When an assessee in running an eligible business u/s 44AD and who has opted for computation of profits and gains of business on presumptive basis shall be reqired to pay advance tax of the whole amount in one installment on or before the 15 March of the financial year.
PAYMENT of advance tax in case of casual income/capital gains:
(1) As we have discussed earlier that assessee has to estimate his income. But it is not possible to estimate the value of capital gain and casual income such as lotteries, cross word puzzles etc. So it is provided that if any such income arises after the due date of any instalment then, the entire amount of tax payable (after deduction of TDS) on such income should be paid in the remaining instalments of advance tax which are due.
(2) If no instalment is due, the whole tax should be paid by 31 March of the relevant financial year. If entire tax is paid, interest on late payment shall not be leviable,
Inserted by Finance Act, 2013: Amended by Finance Act, 2019
Section 87A– Rebate Limit increased to t 12,500/- for AY 2020-2021 for resident individuals having total income up to 5,00.000 lacks.
EXPLANATION
With a view to provide tax relief to the individual tax payers who are in lower income group, the Act has provided rebate from the tax payable by an assessee, if the following conditions are satisfied: 1. The assessee is an individual 2. He is resident in India. 3. His total income does not exceed 5,00,000/-
Quantum of rebate: The rebate shall be equal to:
(1) The amount of income-tax payable on the total income for any assessment year or
(2) 12.500, whichever is less. (“)
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