akgoyal | Jun 4, 2018 |
FAQ on Advance Tax
1. Who is liable to pay Advance tax
As per Section 208 of the Income Tax Act,
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2. What is the procedure for computing advance tax
Advance tax is liable to be paid in every case where the advance tax payable is Rs. 10,000 or more. A Resident Senior citizen not having any income from business/profession, is not liable to pay advance tax with effect from A.Y 2013-14 onwards.
An assessee, who opts for the presumptive taxation scheme under section 44AD is exempted from the payment of advance tax related to such business (Upto A.Y 2016-17).
From the A.Y 2017-18, an assessee who opts for the presumptive taxation scheme under section 44AD and section 44ADA is required to pay advance tax related to such business. However, advance tax can be paid during the financial year (immediately preceding to the assessment year) on or before March 15.
The computation of advance tax can be done in the following manner:
Income from salaries xxx |
Income from house property xxx |
Income from Capital Gains xxx |
Income from Business or Profession xxx |
Income from other sources xxx |
Gross Total Income xxx |
Less: Deductions under sections 80C to 80U xxx |
Net Income xxx |
Income Tax on Net Income xxx |
Less: Rebate under section 87A xxx |
Balance xxx |
Add: Surcharge, if any xxx |
Total xxx |
Add: Education Cess @ 2% (not applicable from A.Y 2019-20) xxx |
Add: Secondary and Higher Education Cess @1% (not applicable from A.Y 2019-20) xxx |
Add: Health and Education Cess (Applicable from A.Y 2019-20) xxx |
Total xxx |
Less: Relief under section 89, 90, 90A or 91 xxx |
Less: Pre-paid taxes (i.e. advance tax, self -assessment tax, TDS, TCS, MAT/AMT credit) xxx |
Advance Tax Liability
(The Advance tax calculator is available on https://incometaxindiaefiling.gov.in/)
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3. When Assessing Officer is liable to determine the Advance tax liability
Computation by the Assessing Officer
(a)The total income of the latest previous year in respect of which Officer has assessed income, i.e., the year for which an assessment has been completed by the Income-tax Officer,
or
(b) The total income declared by the assesse in any returnafter the year of assessment by officer., i.e., Any income furnished by the assessee in Income-tax return for any previous year after
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4. Which tax rates are to be used for computing advance tax liability
For computing the advance tax liability of the prevailing tax rates or the rates in force of the previous year for which the advance tax is to be computed are to be used.
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5. What should I do on receiving the notice from income-tax department for the payment of advance tax, if my actual income is more than what is determined by the tax officer
Assessing Officer can serve an order requiring the assesse to pay advance tax, if he is of the opinion that such person is liable to pay advance tax.
– However, if you feel that year advance tax liability is lower than the liability calculated by the income-tax officer; you may file an estimation of the income and amount of tax payable thereon
– Such information should be submitted in Form No. 28A to the Assessing Officer
– Alternatively, In case the tax demand calculated by the Income-tax officer is lower than the tax liability computed by you, you should pay the advance tax as per your own computation.
– No intimation to Income-tax officer is required to be made in such cases.
6. What is Form 28A
In case the Assessing Officer’s estimation of current income is more than the assesse’s estimate then he is required to send an intimation in Form no. 28A giving estimate of such reduced income and advance tax.
The form is prescribed under Rule 39 of the Income-tax Rules (Form No. 28A).
7. Who is responsible to file Form 28A
In case the Assessing Officer’s estimation of current income is more than the assesse’s estimate then the assessee is required to file an intimation in Form no. 28A giving estimate of income and advance tax.
The estimation is required to be filled and signed by a person who is authorized to sign a return of income.
8. Does credit of TDS allowed while calculating advance tax
As per section 208 of the income-tax Act, 1961, every person whose estimated tax liability for the year is INR 10,000 or more, after TDS (taxes deducted at source), shall pay advance tax.
Therefore, credit of TDS is to be taken while calculating the advance tax liability.
However, if the amount is given or credited by payer without deduction of tax then the benefit of TDS cannot be given while calculating the advance tax liability.
9. What should we do if the bank is closed on the last day for payment of advance tax
10. In case of advance tax, when is assesse considered as assesse-in-default
For the purpose of advance tax, an assesse will be considered as assesse-in-default if he:-
11. How to compute advance tax on capital gains income
Advance tax is payable on total income which includes capital gains and casual income (i.e., income from lotteries, crossword puzzles, etc.).
However, it is practically not possible to estimate the income from capital gain and casual income in advance. Therefore, in such cases it is provided that if any such income arises after the due date of any installment, then the remaining tax calculated on capital gain and casual income shall be paid in remaining installments of capital gains which are due.
If the entire amount of tax is so paid then no interest for late payment is levied.
12. What should be kept in mind while making payment of tax
While making payment of tax, apart from other things, one should clearly mention following details :
13. How do advance tax paid get reflected in Form 26AS
Once the Advance Tax is paid, it will be reflected on assessee’s Form 26AS within 3-4 working days of making the payment.
14. What to do if I forgot to bifurcate the amount of tax, surcharge and Cess while making the online payment
15. Can I claim the deduction of Advance tax payments against my profits
Advance Tax is not an expense.
16. Who is not required to pay Advance tax
17. What will be the due date for the payment of advance tax if the same is payable by virtue of an order from the Assessing Officer/ Income Tax Officer
Where advance tax is payable due to the notice of demand issued by Assessing Officer then whole or part of the advance tax is payable in the remaining installments, i.e., installments due during the financial year after the date of notice.
18. Can payment of advance tax be made through any bank account
19. Can estimate of income be revised for the purpose of advance tax
In case the assesee wants to revise the estimate of income after making first/ second installment of advance tax, the assesse can revise the remaining installment of advance tax in accordance with his revised estimate of current income and pay the advance tax accordingly.
20. Is there any compliance if an assessee revises its estimate of income for advance tax
An assessee can revise the estimation of income and pay the taxes accordingly without any requirement of filing the estimation of income with the department.
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