Advance Tax payment due date for FY 2020-21

Advance Tax payment due date for FY 2020-21

Studycafe | Mar 11, 2021 | Views 2291664

Advance Tax payment due date for FY 2020-21

Advance Tax payment due date for FY 2020-21

This Article discusses provisions related to the payment of Advance Tax. Please note that the due date of Payment of the Last installment of Advance Tax for FY 2020-21 is 15th March 2021.

What is the meaning of Advance Tax?

Usually, tax is paid when income is self-assessed i.e. ITR is filed. ITR filing for a Financial Year Happens after the end of the Financial Year, i.e. in the Assessment Year. Advance Tax means paying Tax for a Particular Financial Year in that FY in which income is earned itself. 

What are the Due Dates for Payment of Advance Tax?

Advance Tax Due Dates for Individual and Corporate Tax Payers:

Due DateAdvance Tax Liability
On or Before 15th June15% of Tax
On or Before 15th September45% of Tax
On or Before 15th December75% of Tax
On or Before 15th March100% of Tax

Advance Tax Due Dates for Individual Taxpayers who have opted for Presumptive Taxation:

100% of Tax Should be Paid on or before 31st March 2021.

What are the Legal Provisions in Income Tax Act related to Advance Tax?

SectionBrief Description
208Conditions of liability to pay advance tax
209Computation of advance tax
210Payment of advance tax by the assessee of his own accord or in pursuance of an order of Assessing Officer
211Installments of advance tax and due dates

Is there any Exemption From Payment of Advance tax?

  • A taxpayer having Tax Liability of up to Rs. 10000 is not required to pay advance Tax.
  • Senior Citizens [Having to Age of more than 60 Year] not having income under the head Profits and gains from business [PGBP] are not required to pay advance tax.
  • Also usually in the case of salaried employees, TDS is deducted by the employer on their salary income. In such cases, they are also not required to pay Advance Tax.
  • Provisions of Advance Tax are applicable on Non-Residents having Income Accrue or arise in India.

How to Calculate Advance Tax Liability?

  • Advance Tax liability is calculated on estimated Taxable Income as per Income Tax Act.
  • While Calculating the estimated Taxable Income as per Income Tax Act only Specific Deductions as per Income Tax Act are allowed.
    • For Example in the case of a company, while calculating Advance Tax Depreciation as per companies act will be disallowed, and as per Income Tax Act will be allowed.
    • Similarly, Deduction under Chapter VIA is allowable while computing liability of advance tax.
Income from salaryXXX
Income from house propertyXXX
Profits and gains of business or professionXXX
Capital gainsXXX
Income from other sourcesXXX
Gross Total IncomeXXX
Less: Deductions under Chapter VI-A(XXX)
Total Taxable IncomeXXX
Tax on total income at applicable ratesXXX
Less: Rebate under section 87A(XXX)
tax liability After RebateXXX
Add: SurchargeXXX
tax liability After SurchargeXXX
Add:Education cess @ 3%XXX
Tax liability for the yearXXX
Less: TDS(XXX)
Tax payableXXX
Advance Tax(Above Tax) x (specified percentage)

The credit of TDS deducted can be taken while calculating Advance Tax Liability.

How to make Payment of Advance Tax?

Question: What are the penal provisions attracted, if advance tax is not paid/ paid less or is not paid within the prescribed time?

Answer: If the Income Tax is not payable as per the provisions, Interest is liable to be paid for late payment of tax as follows:

1. Interest u/s 234C Interest @ 1% p.m. for a period of 3 months, will be payable for every deferment, except for the last installment of 15th March where it will be 1% for one month is payable if the tax is not paid as per the due dates i.e. for Deferment in Installments of Advance Tax

2. Interest u/s 234B Interest @ 1%p.m. from 1st day of assessment year upto the date of deposit tax & interest is payable if 90% of the assessed tax is not paid or is short paid before the end of the financial year i.e. for Default in payment of Advance Tax.

Question: Can the Income-tax department issue notice to the assessee for payment of Advance Tax?

Answer: Yes. Assessing Officer may pass an order u/s 210(3) of the Income Tax Act 1961 or amended order u/s 210(4) and issue a notice of demand u/s 156 requiring the assessee to pay advance tax.

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