advance tax

Refer:  income-tax/calc-1819

What is the Advance Tax and why it is paid in Advance?

Tax is a major source of fund for any Government in the world. In India as per general provision of the Income Tax Act, 1961 every person whose income is exceeds threshold exemption limit is liable to pay income tax. However for speedy and efficient tax collection a mechanism is developed by government in the form Advance Tax. Advance tax is a payment mechanism in which tax is deposited by assessee in installment instead of entire amount deposited at the end of financial year. For assessee’s point of view advance tax is helpful for fund management as the tax liability is divided in installments.

Which Income attracts liability to pay Advance Tax under Income Tax Act 1961?

There is no exemption to particular income. If any income which is liable to tax and total tax liability after TDS Credit exceeds Rs.10,000/- then Advance Tax has to be deposited on or before specified dates.

Whether entire Advance Tax can be deposited at the end of relevant previous year?

As per amendment in section 211 of Income Tax Act 1961 by Finance Act 2017, an assessee who declares profits and gains in accordance with the provisions of sub-section (1) of section 44AD or sub-section (1) of section 44ADA, as the case may be, can deposit whole amount of such advance tax during each financial year on or before the 15th March

What is meant by self-assessment tax?

Self Assessment tax means any balance tax paid by the assessee on the assessed income after taking TDS and Advance tax into account before filing the Return of income.

What are the Statutory Provisions for payment of Advance Tax in India?

Following are the sections of the Income Tax Act, 1961 which deal with the provisions of advance tax:

• Section 208: Conditions of liability to pay advance tax
• Section 209: Computation of advance tax
• Section 210: Payment of advance tax by the assessee of his own accord or in pursuance of order of Assessing Officer.
• Section 211: Installments of advance tax and due dates.

When Advance tax is payable? / Who is liable to pay Advance Tax in India?

As per section 208, advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee is ten thousand rupees or more. Thus provision of advance tax is applicable on all assessee whose tax liability comes more than Rs.10,000/-. However in case following case advance tax need not be deposited :

1) where entire tax liability is covered by TDS deducted then in this situation advance tax is not applicable.

2) Resident individuals who are over 60 years of age and do not have income chargeable under the head ‘Profits and Gains of Business or Profession’ are not required to pay advance tax. Further assessees covered under section 44AD of the Act can deposit his liability of entire advance tax upto 15th March 2018.

What are the due dates and amount of advance tax payment paid in India?

Note: Any tax paid till 31st March 2018 is treated as advance tax.

Whether a Non-Resident Indian (NRI) or a Non Resident is required to pay Advance Tax in India?

Yes. The advance tax is applicable on both Non-Resident Indian (NRI) or a Non Resident if they have any income accrue during the year in india.

How can I pay income tax? / What are the mode of payment of Advance Tax?

Advance Tax can be deposited through cash, cheque and electronic mode (Debit Card/Credit Card). The challan specified for advance tax is ITNS 280. All designated branches of banks empanelled with the Income Tax Department are accepted the advance tax. Assessee can pay Advance Tax Online through TIN-NSDL website.

What are the penal consequences in case of failure to deposit Advance Tax within prescribed time?

If advance tax is not paid or the amount of advance tax paid is less than 90% of the assessed tax, the assessee shall be liable to pay simple interest @ 1% p.m. u/s 234B from 1st day of assessment year upto date of deposit tax & interest. Further u/s 234C if the payment of advance tax is deferred beyond the due dates, interest @ 1% p.m., for a period of 3 months, will be payable for every deferment, except for the last installment of 15th March where it will be 1% for one month.

What is remedy in case Bank is closed on Last day to Deposit Advance Tax?

If the last day for payment of any installment of Advance Tax is a day on which the receiving bank is closed,  the assessee can make the payment on the next immediately following working day, and in such cases, the panel interest for delay in deposit Advance Tax.

How can assessee verify the status of his tax deposition and other tax credit?

Due care should be taken with respect to PAN, Assessment Year and tax Code before depositing advance tax. The assessee may verify status his Advance Tax deposited through following links:

1. Form No.26 AS: The credit of tax depsoited would be reflected in Form 26AS within one week of making the payment.
2. NSDL e-Governance: Challan Status Inquiry can be made through OLTAS Application (NSDL) by visiting https://tin.tin.nsdl.com/oltas/index.H T M L.

Can Income tax department issue notice to assessee for payment of Advance Tax ?

Yes, the Assessing Officer may pass an order upto the month of February requiring assessee to pay Advance Tax. Assessing Officer may pass an order u/s 210(3) of the Income Tax Act 1961 or amended order u/s 210(4) and issue a notice of demand u/s 156 requiring assessee to pay Advance Tax.

In case assessee found that income estimated by Assessing Officer is higher than his own estimate then assessee may submit Form No. 28 containing his own estimated income and tax.