Liability for payment of advance tax under the Income Tax Act, 1961

  • Advance tax shall be payable during a financial year where the amount of such tax payable by the assessee during that year is ten thousand rupees or more.
  • There are two exception provided in income tax act where even if tax payable by the assessee during financial year is ten thousand rupees or more though advance tax liability not arise.
    (a) Where assessee does not have any income chargeable under the head “Profits and gains of business or profession”; and
    (b) is of the age of sixty years or more at any time during the previous year.

Computation of advance tax.

  1. By the Assessee
    • Estimate his current income
    • income-tax thereon shall be calculated at the rates in force in the financial year
  2. By the Assessing Officer
    • Total income of the latest previous year in respect of which the assessee has been assessed by way of regular assessment or
    • the total income returned by the assessee in any return of income furnished by him for any subsequent previous year,
    • whichever is higher
  3. By the Assessing Officer
    • Total income declared in the return furnished by the assessee for the later previous year, or, as the case may be,
    • The total income in respect of which the regular assessment shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year

Note:

  1. The advance-tax calculated be reduced by the amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income. However, for computing liability for advance tax, income-tax calculated shall not be reduce if the person responsible for deducting tax has paid or credited such income without deduction of tax or it has been received or debited by the person responsible for collecting tax without collection of such tax.
  2. Where the Finance Act of the relevant year provides net agricultural income shall be taken into account for the purposes of computing advance tax in case of any class of assessee, then, the net agricultural income to be taken into account.
  3. Where the Finance Act of the relevant year specifies any separate rate or rates for the purposes of computing advance tax in the case of every Hindu undivided family which has at least one member whose total income of the previous year exceeds the maximum amount not chargeable to income-tax in his case, then the advance tax advance tax shall be computed as such rate.

Due date of installments for the payment of advance tax.

Advance Tax Payable (For all the Assesse other than covered under section 44AD or 44ADA under the Income Tax Act, 1961)

Due date of instalment % of advance tax
1.   On or before the 15th June 15% of advance tax
2.   On or before the 15th June 45% of advance tax
3.   On or before the 15th December 75% of advance tax
4.   On or before the 15th March 100% of advance tax

 

For taxpayers who have opted for Presumptive Taxation Scheme covered under section 44AD or 44ADA under the Income Tax Act, 1961.

Due date of instalment % of advance tax
On or before the 15th March 100% of advance tax

 

Interest on advance tax for the short or excess payment.

Simple interest at fifteen per cent per annum on the amount payable short \exceeds the amount of the assessed tax from the 1st day of April next following the said financial year to the date of the regular assessment for the assessment year shall be payable/receivable by assessee respectively.

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