Phoenix Auditing

Advance Tax for FY 2018-19

  1. What is Advance Tax
  2. Who should pay Advance Tax?
  3. To whom is Advance Tax provisions are not applicable?
  4. Is it Mandatory to pay advance tax?
  5. How is Advance Tax Calculated?
  6. What are the due dates to pay Advance Tax?
  7. Can we pay Advance Tax after due dates?

1.What is Advance Tax?

Advance tax means payment of taxes in advance before the end of the financial year.

2.Who should pay Advance Tax?

Advance tax is payable during a financial year where the amount of tax payable is INR 10,000 or more (section 208).

3.To whom is Advance Tax provisions not applicable?

Provisions of the advance tax shall not apply to an individual resident in India if the following conditions are satisfied (section 207) –

1. The resident individual does not have any income chargeable under the head “Profit and Gain of Business or Profession”; and

2. The resident individual is of the age of 60 years or more at any time during the previous year.

It must be noted that advance tax is applicable to all the taxpayer, however, if the resident individual fulfills the above two mentioned conditions, then, he is not required to make an advance tax payment.

4.Is it Mandatory to pay advance tax?

Yes it is mandatory to pay advance tax. In case of late payment of advance tax, interest under section 234C and under section 234B is payable.

Interest under section 234B is payable if –

1. The assessee had failed to pay advance tax; or

2. The assessee has paid the advance tax, however, the same is less than 90% of total tax payable.

In case the assessee falls under any of the above cases, the simple interest @1% for a month or part thereof is chargeable for the period from 1st day of April next following the financial year to the date of determination of total income.

5.How is Advance Tax Calculated?

PARTICULARS AMOUNT
Income from Salary XXX
ADD Income from House Property XXX
ADD Capital Gains XXX
ADD Income from other sources XXX
ADD Profit and gains of business or profession XXX
ADD Agricultural income XXX
LESS Deduction (Chapter VI-A) (XXX)
NET TAXABLE INCOME XXX
INCOME TAX ON NET TAXABLE INCOME XXX
ADD Surcharge XXX
ADD Education cess XXX
ADD Secondary and higher education cess XXX
TOTAL TAX LIABILITY XXX
LESS Rebate (XXX)
LESS TDS/TCS/MAT (AMT) credit utilized (XXX)
ADVANCE TAX PAYABLE XXX

6.What are the due dates to pay Advance Tax?

ADVANCE TAX DUE DATES PERCENTAGE OF ADVANCE TAX PAYABLE
On or before 15th June 15% of advance tax
On or before 15th September 45% of advance tax
On or before 15th December 75% of advance tax
On or before 15th March 100% of advance tax

7. Can we pay Advance Tax after due dates?

Yes, an advance tax can be paid after due dates, however, interest under section 234C would be payable for delay in payment of advance tax

It is important to note here that interest under section 234C is not payable where short fall is on account of under-estimate or failure to estimate the following –

1. The amount of capital gain;

2. The amount of speculative income (lottery income, gambling income etc.);

3. The income under the head ‘Profit and gains of business or profession’ in cases where the amount accrues / arise for the first time;

4. The amount of tax on certain dividends received from domestic companies (section 115BBDA).

However, interest u/s 234C is not payable in above cases, provided the assessee has paid the whole amount of tax payable on above referred income at the time of paying remaining advance tax instalment or if no instalment is due, the tax is paid before 31stMarch.