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Advance tax

NILESH PRAJAPATI (EXECUTIVE ACCOUNTS) (66 Points)

24 August 2012

what is diff between advance tax and tds ? how does these entries made at the end of the year. pls explain with example

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Giridhar S Karandikar (Team Lead) (7548 Points)
Replied 24 August 2012

Advance tax is the tax paid in advance by the assessee himself during the financial year. It is paid by estimating the total tax liability for the year & then calculating the advance tax. For Corporates AT is requried to be paid in four installments wihc is on or before 15th of Jun, Sept, Dec, & Mar. Other than corporates AT is paid only in three installments from 15th Sept . When the assessee assesses his tax liability in the Asset Year, the total advnace tax paid is deducted from the total tax liability. If the advnace tax paid falls short of 90% of the total tax liability then the assessee is requried to pay interest u/s 234B @ 1% from Arp till the date of filing the return. If the advncae tax paid falls short for each of the installments as per the actual tax liability against the AT paid on estimated tax laibility, then assesse is requried to pay iterest @ 1% for 3 months.

TDS on the other hand is also a prepaid tax wihch is not paid by the assessee himself directly but is deducted from teh payments made to the assesses by the payer in respect of certain payments for whihc TDS is applicable. The TDs so made is also deducted from teh total tax liability.

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