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Advance Tax – Better to pay

Old saying; - Nothing's certain but death and taxes,


Every Income Tax Asseesee whose Tax liability is more than Rs 10,000 must pay Advance Tax.  Income Tax Assessee can be any one – Salaried person & Non salaried person. For Salaried person, tax liability is calculated after deducting TDS amount by his employer. For others, they have to do self assessment  on your own or take help of your CA & ascertain whether their tax liability is more than 10,000 on his income earned/earning for the period April 2010 to March 2011.

Every Income Tax Asseesee has to forecast his Income & ascertain his tax liability. Following are examples which increase Taxable Income & tax liability.

1.     Interest income from FD &SB

2.      Second Form 16 when there is change in job

3.      Short term/Long term capital gain from shares, Mutual funds or property (Residential & Non Residential)

4.      Errors in Form 16 (you need to calculate tax correctly even though form 16 has wrong calculation)

5.      Rental income

6.      PF/Gratuity withdrawal (These have some exemptions too)

7.     Business Income from trade or profession


While ascertaining taxable Income of an Assessee, he has to take care of the above Incomes/losses & then arrive at final taxable Income & Tax liability there on. Please note that above instances may not be part of Form 16 for salaried people & employer is not going to deduct tax on them.

Once his tax liability is more than Rs 10,000 taking into all taxable instances, then please continue reading this article  otherwise you can stop reading this article.

1.     Instalments of advance tax and due dates.

Advance tax on the current income calculated in the manner laid down in section 209 shall be payable by-


Due date for Payment of Advance Tax

For Individuals / Firms

For Corporate Assessees

15 June

Not applicable

1st Payment of up to 25%

15 September

1st Payment of up to 30%

2nd Payment of up to 50%

15 December

2nd Payment of up to 60%

3rd Payment of up to 75%

15 March

3rd Payment of 100%

4th Payment of 100%

Provided that any amount paid by way of advance tax on or before the 31st day of March shall also be treated as advance tax paid during the financial year ending on that day for all the purposes of this Act.

If the notice of demand issued under section 156 in pursuance of an order of the Assessing Officer under sub-section (3) or sub-section (4) of section 210 is served after any of the due dates specified in sub-section (1), the appropriate part or, as the case may be, the whole of the amount of the advance tax specified in such notice shall be payable on or before each of such of those dates as fall after the date of service of the notice of demand

2.     Penal Interest :  Following Interest are attracted if tax liability exists after 31St March 2011





Sec 234C

3.7% on Tax Payable amount


Sec 234B

1 % per month of Tax payable amount if it exceeds Rs 10,000 from due date of filing


Conclusion: Since Interest payable on Tax payable is more than interest that can be earned  from FD or any other source, its wise decision on the part of Income Tax Assessee to pay Advance tax in installments as prescribed above. Also he will earn interest at the rate 6% p.a for refund. Advance Tax payment is better way of Investment which secures your future  even government’s J

PS:   Income Tax Department is watching your High Value Transactions whether its purchase or sale of property/share/ amount credited to your account/payments made to others.

By:CA. Chikkerur CR | B.Com, MBA, CA, DISA & LLB

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CA. Chikkerur C R
Category Income Tax   Report

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