Advance tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 November 2015 If any one receive payment from Govt. Dept. It is necessary to pay income tax on receiving amount in advance?
Say if receiving amount is > Rs.5000000. Or can receiving person demand deduction of tax {full} amount from receiving amount? { TDS}
If tax is not paid by receiving person then Are Dept. reject his payment.?
If tax{full} deduction is not there then Are person demand self assessment mode of payment of tax ?
If receiving person don't have tax amount; then how he will full fill his tax responsibility?

Querist : Anonymous

Querist : Anonymous (Querist)

18 November 2015 My Queri not answer yet?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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14 July 2024 When an individual or entity receives a payment from a Government Department in India, several tax implications and procedures come into play, especially concerning TDS (Tax Deducted at Source) and subsequent tax obligations. Here’s a detailed explanation:

### Tax Deduction at Source (TDS):

1. **Applicability of TDS**:
- **TDS is applicable** when payments exceed specified thresholds set by the Income Tax Act, 1961. For instance, for payments received from Government Departments, TDS is typically deducted if the amount exceeds Rs. 5,00,000.

2. **Responsibility of Government Department**:
- The Government Department making the payment is responsible for deducting TDS at the applicable rates before making the payment to the recipient.
- The deducted TDS is then deposited with the government on behalf of the recipient.

3. **Consequences of Non-compliance**:
- If TDS is not deducted when it should have been, the Government Department may face penalties and interest for non-compliance with TDS provisions.

### Tax Payment Obligations of the Recipient:

1. **Tax Liability**:
- Even though TDS is deducted at source, the recipient (individual or entity receiving the payment) is responsible for ensuring their overall tax compliance.
- This includes filing an income tax return and paying any additional tax liability that may arise, depending on their total income and deductions.

2. **Demand for Tax Payment**:
- If TDS deducted is insufficient or if there was no TDS deducted due to an error, the recipient is still liable to pay the full amount of tax due.
- In such cases, the recipient may need to pay the remaining tax amount through self-assessment tax before filing their income tax return.

3. **Non-payment of Tax**:
- If the recipient fails to pay the required tax, including any shortfall due to inadequate TDS deduction, they may face penalties and interest as per Income Tax rules.
- Non-compliance can also result in legal consequences and affect future dealings with Government Departments.

### Fulfilling Tax Responsibility:

1. **Payment of Tax**:
- If the receiving person does not have the necessary funds to pay the tax liability, they may need to explore options such as arranging funds, applying for a loan, or negotiating with tax authorities for installment payments (if eligible).

2. **Advance Tax Payment**:
- For taxpayers with significant income, advance tax payments are required in installments throughout the year to avoid interest under Sections 234B and 234C of the Income Tax Act.

### Conclusion:

Receiving payments from Government Departments in India involves adherence to TDS provisions, subsequent tax compliance, and potential penalties for non-compliance. It’s crucial for recipients to understand their tax obligations, including the responsibility for self-assessment and payment of any additional tax due beyond TDS deductions. Seeking guidance from a tax advisor or accountant can help ensure proper compliance with tax laws and regulations.

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