ADVANCE TAX

CA.DIPAYAN DAS
 INTRODUCTION
When a person becomes liable to pay Advance Tax
• Every person is liable to pay advance tax if advance tax payable is Rs 10,000 or more.
• Tax on net Income+ Surcharge= Tax Liability –TDS=>10,000.
• Example- Tax liability =Rs.1,00,000, TDS deducted/deductible= Rs.90,000.So he is liable to pay advance tax.
• A senior citizen not having any income from business/profession, is not liable to pay advance tax.
When advance tax payment becomes due
Due Date of payment of advance tax For any assessee ( except An assessee who declares his
column3) business/professional income In
presumptive sections 44 AD(1) and 44
ADA (1)
On or before June 15 of the previous year Up to 15% of advance tax
payable
On or before Sept 15 of the Previous year Up to 45% of advance tax -
On or before December 15 of the Previous Up to 75% of advance tax
Year
On or before Mar 15 of the previous year Up to 100% of advance tax Up to 100% of advance tax payable
 CONSEQUENCE OF NON-PAYMENT OF ADVANCE TAX

For default in payment of advance tax (234B)-

• Interest under section 234B is applicable when:
• Your tax liability after reducing TDS for the financial year is more than Rs 10,000 and you did not pay any advance tax.
OR
• You paid advance tax, but advance tax paid is less than 90% of ‘assessed tax’.
• In any one of the above cases, interest under section 234B shall be applicable. Interest is calculated @ 1% on Assessed Tax less Advance Tax. Part of a month is
rounded off to a full month.
Example:
1.Radhika’s total tax liability is Rs 48,000. Radhika paid this amount on 12th June while filing her return. No tax was deducted at source in her
case. Radhika’s total tax liability is more than Rs 10,000, and hence she was liable to pay advance tax. As a result, Radhika will be liable to pay
interest under section 234B. Interest calculation Rs 48,000 x 1% x 3 (April, May, June) = Rs 1,440 Radhika is liable to pay Rs 1,440 interest as per
section 234B. So during return filing, she has to pay 49,440.
2. Arnav had a total tax payable of Rs 56,000, out of which Rs 48,000 was paid by him on 29th March as advance tax. The remaining balance of Rs
8,000 was paid by Arnav at the time he was filing his return on 30th May. Even though Arnav has paid advance tax, we need to check whether he
paid at least 90% of the assessed tax as advance tax or not. Assessed tax is Rs 56,000. 90% of assessed tax is Rs 50,400. However, Arnav deposited
only Rs 48,000, which is less than 90% of assessed tax. Therefore, Arnav is liable to pay interest under section 234B. Interest
calculation 56,000(assessed tax) – Rs 48,000 (advance tax) = 8,000 8,000 x 1% x 2 (April and May) = Rs 160. Rs 160 is the interest payable under
section 234B by Arnav. In May , Arnav will pay 8000+160=8,160.
3. Assume that the total tax Rohit needs to pay for the financial year is Rs. 1,50,000. A TDS of Rs 1,35,627 was already deducted from his income.
Rohit paid Rs 5,000 on 25th March and balance of Rs 9,373 he paid at the time of filing his return on 20th July. Let’s check whether Rohit needs to
pay interest under section 234B First let’s calculate assessed tax. Assessed tax = Rs 1,50,000 (total tax) – Rs 1,35,627 (TDS) = Rs 14,373 Rohit
should have paid at least 90% of the assessed tax or 90% of Rs 14,373 which is Rs 12,935 before 31st March. However, he paid only Rs 5,000.
Therefore, Rohit is liable to pay interest under section 234B Interest calculation Rs 14,300(assessed tax, fraction of 100 ignored) – Rs
5000(Advance Tax) = Rs 9300 Rs 9300 x 1% x 4 months (April, May, June, July) = Rs 372 Rs 372 is the interest payable under section 234B by Rohit. 
 CONSEQUENCE OF NON-PAYMENT OF ADVANCE TAX

• 234C-The interest for late payment is set at 1% on the amount of tax due. It is calculated from the individual cut
off dates shown above, till the Rate
Secenerio date of Interest
actual payment of outstanding
Period of taxes. Amount on which Interest is
Interest calculated
If Advance Tax paid on or Simple interest @1% per 3 months 15% of Amount* (-)tax already
before June 15 is less than month deposited before June 15
15% of the Amount*

If Advance Tax paid on or Simple interest @1% per 3 months 45% of Amount* (-) tax already
before September 15 is less month deposited before September 15
than 45% of the Amount*

If Advance Tax paid on or Simple interest @1% per 3 months 75% of Amount* (-) tax already
before December 15 is less month deposited before December 15
than 75% of the Amount*

If Advance Tax paid on or Simple interest @1% per ------------------ 100% of Amount* (-) tax already
before March 15 is less than month deposited before March 15
100% of the Amount*
EXAMPLES

• Consider that your total tax liability for this financial year is Rs. 100,000 and  it needs to be paid in installments
Payment Dates above. Assume
as explained Advance Taxis no TDS
there Total Advance Tax paid ( Shortfall
here. Penalties (Cumulative)
payable Cumulative) (Cumulative)
• If you made partial payments instead, you will be liable to pay interest as per the last column in the table below:
15thTotal
Juneinterest Payable is  Rs 260015,000 5,000 10,000 @1% * 3*10,000 = 300

15th September 45,000 25,000 20,000 @1% * 3 *20,000=600

15th December 75,000 35,000 40,000 @1% * 3 *40,000=1200

15th March 1,00,000 50,000 50,000 1% * 1 *50,000=500