A Birds eye view of Advance tax provisions embedded under Income-tax Act, 1961

What is advance tax?

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U/S 208�Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions.

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Who is liable to pay advance tax?

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� U/S208 assessee means any person who is liable to pay the income tax. i.e.

AOP, FIRMS, INDIVDUAL ,PATNERSHIPC0MPANY etc.

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� This section is apply only whose assessee those tax liability after deduct the TDS is more then 10000/-

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Example:-

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An assessee have a tax liability of 50000/- and his TDS is 30000/-�����������������������������������������

Balance Tax liability-50000-30000=Rs20000/-

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Then this section is apply on this assessee if after deduct the TDS his liability is less than�10000/-, then do not apply on this assessees.

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How is it calculated?

Calculation of Interest for assessee other then companies

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Example-

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An assessee have a tax liability of 50000/- and his TDS is 30000/-�����������������������������������������

Balance Tax liability- 50000-30000= Rs20000/-

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Calculation:

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1)�Interest for first instalment-�20,000 * 30% =�6000/-

6000*1%*3month=180/-

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2 Interest for second instalment-20,000 * 60% = 12000/-

12000*1%*3month=360/-

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3) Interest for Last instalment-�20,000 * 100% = 20000

20000*1%*1month=200/-

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Total Interest U/S 234c - 180+360+200=840/-

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Penal provisions on failure to comply with the advance tax provisions

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� If any kind of assessee, Company or other then company does not pay the advance tax then these assessee are consider the defaulty by income tax department.

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� They have to pay the SIMPLE INTEREST @1% per month.

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� Default of every instalment they have to pay interest of 3 months except for March.

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� If they do default of March�s instalment have to pay only 1month.

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� Last date of payment is 15 March, but the payment made before 31 March is consider as advance payment of tax. However the assessee is liable to pay interest u/s 234c.

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Suggested points:-

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For all types of assessee

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� If assessee have income other than salaried they should calculated their tax liability after deducting TDS starting of the assessment year (current year).

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� If their liability is exceed 10000/- then they have to pay the advance tax.

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For the company

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� According to Section 211 Company who is liable to pay the advance tax u/s 208. They should paid 15% of his total Tax liability, before or on 15 June of current year in which he earned the INCOME.

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� Company who is liable to pay the advance tax u/s 208. They should paid 45% of his total Tax liability, before or on 15 September of current year in which he earned the INCOME.

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� Company who is liable to pay the advance tax u/s 208. They should paid 75% of his total Tax liability, before or on 15 September of current year in which he earned the INCOME.

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� Company who is liable to pay the advance tax u/s 208. They should paid % of his total Tax liability, before or on 15 September of current year in which he earned the INCOME.

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� If an assessee is a salaried person only they should not need to pre calculation of tax liability because their employer deducts TDS according to their tax liability.

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� But if assessee who is salaried person only change the job and their pay scale also increase, they should calculated the tax liability after� 2nd,3rd& 4th quarter. If their liability is exceed 10000/-

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For other than Company

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� According to Section211 an assessee other than company who is liable to pay the advance tax u/s 208. He should paid 30% of his total Tax liability, before or on 15 September of current year in which he earned the INCOME.

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� An assessee other than company who is liable to pay the advance tax u/s 208. He should paid 60% of his total Tax liability, before of on 15 December of current year in which he earned the INCOME.

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� An assessee other than company who is liable to pay the advance tax u/s 208,He should paid 100% of his total Tax liability, before or 15 March� of current year in which he earned the INCOME.