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Advance tax and 44 ad

30 January 2015

AY 2014-15 I paid 90,000 as self assessment tax. I filed returned us44AD presumptive income. I received a letter from Income tax dept today to deposit advance tax for 2015-16 else an order u/s 210 of IT Act may be passed. Am I liable to pay advnace tax in this as I files returned under 44AD. What reply I should give to IT Dept.

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13 Replies

Shobhit Goel (Chartered Accountant) (101 Points)
Replied 30 January 2015

Hi Ruchi,

Please refer the Section 44AD.

in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession"

Also, please refer clause 4 of section 44AD

(4) The provisions of Chapter XVII-C shall not apply to an eligible assessee in so far as they relate to the eligible business.

Chapter XVII - Collection & recovery of tax

Section 190 - Deduction at source and advance payment.

Hence, in view of the above, you are not liable for advance tax.

Thanks,

Shobhit

Ruchi Agrawal (law) (129 Points)
Replied 30 January 2015

I showed profit 20% and have eligible business us44AD. What reply I should give to Income tax dept.

CA Pankaj Kr Agrawal (@Helping Hand) (2143 Points)
Replied 30 January 2015

Hi,

Sorry for misinterpretation . .!!

The provisions of Chapter XVIIC relating to Advance Tax would also not apply in cases where section 44AD is applied.

Suggestions:-

Make a polite reply letter with relevent provision and submit to income tax department.

Thank you.

J. K. Ratan (Compliance Advisor) (794 Points)
Replied 30 January 2015

Dear Richi Any person whose net tax is more than 10000 is liable to pay advance Tax. As in last AY u had paid self assessment tax I.e 90000 is show ur current FY tax will be more than 10000. So it is advisable to pay your advance tax to avoide further interest U/s 234b & 234c

Hitesh Khanna (Accounting & Finance Taxation Company Law Audit ) (839 Points)
Replied 31 January 2015

I would also advise you to deposit Self Asst Tax . Theoritically we may see that provisions of Advance Tax and interest u/s 234 B,C are not applicable for assesses filing return u/s 44AD but practically while filing return one nay notice that the excel sheet calculates interest u/s A,B,C. The software of the I.T. Department may not have been updated with provisions of 44AD. Moreover these notices are system generated and the Department doesnot study each an everycase in detail before issuing such letter.

Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 31 January 2015

In ur case, u r not required to pay advance tax...above advice given by others are right except jay Kumar's.

Arif Ali (Apt Co Advisory) (1230 Points)
Replied 31 January 2015

If assessee goes under presumptive taxation u/s 44AD then he has not required to pay advance tax.

Ramanuj (Accountant.) (834 Points)
Replied 31 January 2015

If any assesse file return u/s 44a then it is exampted form advance tax, you have polity write letter to ITO officer.

tks

Ramanuj

manoj (student) (5205 Points)
Replied 01 February 2015

Just Write to ITO with full details

Ramit sharma (assistant) (52 Points)
Replied 01 February 2015

section 44AD prescribes a method of computing income which are covered under the said act Moreover, advanced tax rules is a rule which is independent of section 44AD If total tax liability for an assesse exceeds rs. 10000 ,then advance tax rules are applicable. Here, the assesse has paid rs. 90000 as tax by self assessment. Hence, advance t as tax provisions become applicable and the INCOME tax department is correct. Now, you have to pay interest for non compliance with as advance tax rules.

Ramit sharma (assistant) (52 Points)
Replied 01 February 2015

arun (ipcc) (37 Points)
Replied 01 February 2015

As per sec44ad if an eligible business assessee opt for presumptive taxation is not liable for advance tax

Arif Ali (Apt Co Advisory) (1230 Points)
Replied 02 February 2015

Originally posted by : Ramit sharma
	section 44AD prescribes a method of computing income which are covered under the said act Moreover, advanced tax rules is a rule which is independent of section 44AD If total tax liability for an assesse exceeds rs. 10000 ,then advance tax rules are applicable. Here, the assesse has paid rs. 90000 as tax by self assessment. Hence, advance t as tax provisions become applicable and the INCOME tax department is correct. Now, you have to pay interest for non compliance with as advance tax rules.