Proprietor advance payment for services to be rendered. TAX CALCULATION - please advice

A proprietor usually gets advance payment once in 3 months for his services rendered like below

FY 2020-2021

Rs X in April 5th 2020 for services to be rendered from April 2020 to June 2020

Rs X in July 5th 2020 for services to be rendered from July 2020 to September 2020

Rs X in October 5th 2020 for services to be rendered from October 2020 to December 2020

Rs X in January 5th 2021 for services to be rendered from January 2021 to March 2021

Income = 4X

FY 2021-2022

Rs X in March 5th 2021 for services to be rendered from April 2021 to June 2021

Rs X in July 5th 2021 for services to be rendered from July 2021 to September 2021

Rs X in October 5th 2021 for services to be rendered from October 2021 to December 2021

Rs X in January 5th 2022 for services to be rendered from January 2022 to March 2022

Income 4X

FY 2022-2023

The problem: He received payment of Rs X exactly in March 31st 2022 for advance services to be performed from April 2022 to June 2022

Case1:

Income in FY 2021-2022 is 4X

Income in FY 2022-2023 is 4X

Case2:

Income in FY 2021-2022 is 5X

Income in FY 2022-2023 is 3X

Question: So how will tax be computed? case1 or case2? If it is case2 tax liability becomes huge

I know there is  a form 10E 89(1) for salaried persons to declare advance salary but is there a form like that for proprietor? 

Thanks 

Shanthi

 

   

 

Replies (6)
Quick Summary
This discussion addresses tax calculation for proprietors receiving advance payments for services. The core issue is how to account for an advance payment received on March 31st for services rendered in the next financial year, potentially shifting income between tax years. Advice suggests that no special form is needed, and the TDS amount can be carried forward to the next financial year, to be declared in the relevant schedule of ITR3.

Income is 4X for both years, and the advance with TDS if any, need to be carry forward for next FY.

Originally posted by : Dhirajlal Rambhia
Income is 4X for both years, and the advance with TDS if any, need to be carry forward for next FY.

Thanks Sir. Any special forms to be filled in or ITR3 is enough. ?

Sir just wanted to clarify that can I simply NOT show the 31st March 2022 income at all and proceed to file ITR3? Then show the income when I file next year?  Or should I show the amount in some form etc? Thanks

No additional form needed to be filed.

Under Schedule Tax paid.......... Table TDS.... fill the TDS amount carried forward to next AY...

Originally posted by : Dhirajlal Rambhia
No additional form needed to be filed.

Under Schedule Tax paid.......... Table TDS.... fill the TDS amount carried forward to next AY...

Thanks again Sir

You are welcome ...                            

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