If the Earnings Tax Legal responsibility of any taxpayer is greater than Rs. 10,000 in a monetary yr, then he’s liable to pay such tax in installments throughout the yr itself fairly than paying this tax on the finish of the yr. This tax which is payable throughout the yr is named “Advance Tax Payment” or “pay as you earn tax” because the tax is liable to be paid on the time the earnings is earned i.e. throughout the yr itself fairly than paying this tax on the finish of the yr.
Advance Tax receipts assist the Govt. to obtain a relentless move of tax receipts all year long in order that the Govt can incur its bills well timed fairly than receiving all tax funds on the finish of the yr. Advance Tax is liable to be paid by all assesses like Salaried, Self Employed, Businessman and many others. earlier than the submitting of Earnings Tax Return. An Earnings Tax Return can’t be filed until the earnings tax is totally paid.
For People with Wage as the only supply of earnings, Advance Tax can be taken care of by the TDS deducted by the employer on the time of fee of salaries as mirrored in Kind 16 and thus there would hardly be any Advance Tax payable. Senior Residents not having any Enterprise Earnings are additionally exempted from the fee of Advance Tax (Launched by Price range 2012)
For all taxpayers incomes earnings from any supply aside from wage, Advance Tax is payable in installments as defined under.
What’s the due date for Cost of Advance Tax?
| Due Date of Installment | Quantity Payable |
| On or earlier than fifteenth June | 15% of the Advance Tax |
| On or earlier than fifteenth Sep | 45% of the Advance Tax |
| On or earlier than fifteenth Dec | 75% of the Advance Tax |
| On or earlier than fifteenth Mar | 100% of the Advance Tax |
Computing the precise advance tax legal responsibility generally will get very troublesome and subsequently the Earnings Tax Dept has launched an Earnings Tax Calculator which is free to make use of by everybody. A demo tutorial video of the Advance Tax Calculator is shared under:
Earlier the proportion of Advance Tax to be paid was totally different for Corporations and aside from Corporations. Nonetheless, Price range 2016 has standardised the charges for each firms and asseesses aside from firms.
The above talked about schedule wouldn’t apply to these taxpayers who’ve opted for the Presumptive Scheme of Taxation beneath Part 44AD or Part 44ADA. For taxpayers choosing this scheme, they might not be required to adjust to the above talked about schedule. The one advance tax due date deadline relevant to such taxpayers can be fifteenth March and such taxpayers can be required to pay 100% of their Tax legal responsibility by fifteenth March.
Cost of Advance Earnings Tax is to be made by means of Challan No. 280 by choosing Advance Tax (100) as the kind of fee as proven under:-
Find out how to calculate of Advance Tax?
Advance Tax is calculated by estimating the present yr earnings after which making use of the tax charges as per the Earnings Tax Slabs in power. The Advance Tax shall be computed as beneath:
| Earnings beneath the 5 Heads of Earnings | xxx | |
| (Much less) | Introduced Ahead Losses and Allowances | xxx |
| (=) | Gross Complete Earnings | xxx |
| (Much less) | Chapter VI-A Deductions | xxx |
| (=) | Estimated Complete Earnings | xxx |
| Earnings Tax on Estimated Complete Earnings | xxx | |
| (Add) | Surcharge (if any) on the above Estimated Earnings | xxx |
| (=) | Complete Tax Payable | xxx |
| (Much less) | Reduction beneath part 89 | xxx |
| (=) | Tax Legal responsibility | xxx |
| (Add) | 2% Schooling Cess | xxx |
| (Add) | 1% SHEC | xxx |
| (=) | Complete Tax Legal responsibility | xxx |
| (Much less) | Reduction of tax u/s 90,90A,91 | xxx |
| (Much less) | MAT Credit score u/s 115JAA | xxx |
| (Much less) | TDS as proven in Kind 16/Kind 16A and mirrored in Kind 26AS | xxx |
| (=) | Advance Tax Legal responsibility | xxx |
Cost of Advance Tax in case of Capital Beneficial properties
Though Advance Tax is liable to be paid on all incomes together with Capital Gains, it’s virtually not potential to estimate the Capital Beneficial properties which can come up in an yr. Due to this fact, in such instances, it’s offered that if any such earnings arises after the due date of any installment, then, your entire quantity of tax payable on such capital acquire (after claiming exemption beneath section 54) shall be paid in remaining installments of Capital Beneficial properties that are due. If your entire quantity of tax payable is so paid, then no curiosity on late fee will likely be levied.
What’s the Curiosity on Late Cost of Advance Tax?
Curiosity on late fee of Advance Tax is relevant as follows
- Curiosity beneath part 234C – Curiosity @ 1% monthly is payable if the tax is just not paid as per the above schedule i.e. for Deferment in Installments of Advance Tax
- Curiosity beneath part 234B – Curiosity @ 1% is payable if 90% of the tax is just not paid earlier than the tip of the monetary yr i.e. for Default in Cost of Advance Tax
For computing Curiosity u/s 234A/B/C and some other Curiosity, Earnings Tax shall be rounded off to nearest hundred and fraction of hundred shall be ignored
Curiosity beneath part 234C for Deferment of Cost of Tax
Curiosity beneath part 234C is liable to be paid @ 1% monthly if
| (a) | Advance Tax paid on or earlier than fifteenth Sept | < | 30% of the Tax Due on Returned Earnings |
| OR | |||
| (b) | Advance Tax paid on or earlier than fifteenth Dec | < | 60% of the Tax Due on Returned Earnings |
| OR | |||
| (c) | Advance Tax paid on or earlier than fifteenth Mar | < | Tax Due on Returned Earnings |
| OR | |||
| (d) | No Tax has been paid by the Assessee |
Word: Tax Due on Returned Earnings means the Tax on Complete Earnings declared in
| Earnings Tax Return | xxx | |
| (Much less) | Reduction of Tax u/s 90 | xxx |
| (Much less) | Reduction of Tax u/s 90A | xxx |
| (Much less) | Reduction of Tax u/s 91 | xxx |
| (Much less) | MAT Credit score u/s 115JAA | xxx |
| (Much less) | TDS Paid | xxx |
| (=) | Tax due on Returned Earnings | xxx |
No Curiosity can be levied in case the assessee is having Earnings beneath head “Earnings and Beneficial properties of Enterprise or Occupation” for the primary time.
Computation of Curiosity for Late Cost of Advance Tax u/s 234C
| (a) | Charge | 1% monthly easy curiosity |
| Interval | 9 Months | |
| Quantity | 15% of the “Tax due on Returned Earnings” | |
| (Much less) Advance Tax paid on or earlier than fifteenth June |
| (b) | Charge | 1% monthly easy curiosity |
| Interval | 6 Months | |
| Quantity | 45% of the Quantity Due on Returned Earnings | |
| (Much less) Advance Tax Paid on or earlier than fifteenth Sept |
| (c) | Charge | 1% monthly easy curiosity |
| Interval | 3 Months | |
| Quantity | 75% of the Quantity Due on Returned Earnings | |
| (Much less) Advance Tax Paid on or earlier than fifteenth Dec |
| (d) | Charge | 1% monthly easy curiosity |
| Interval | 3 Months | |
| Quantity | Tax Due on Returned Earnings | |
| (Much less) Advance Tax paid on or earlier than fifteenth March |
Curiosity beneath part 234B for Default in Cost of Tax
Curiosity @ 1% monthly is payable if
| (a) | Advance Tax Paid by the Assessee throughout the Earlier Yr | < | 90% of the Assessed Tax |
| OR | |||
| (b) | No Advance Tax is paid by the Assessee |
Word: Assessed Tax means
| Tax decided u/s 143(1) or on Evaluation u/s 143(3)/144/147/153A | xxx | |
| (Much less) | Reduction of Tax u/s 90 | xxx |
| (Much less) | Reduction of Tax u/s 90A | xxx |
| (Much less) | Reduction of Tax u/s 91 | xxx |
| (Much less) | MAT Credit score u/s 115JAA | xxx |
| (Much less) | TDS/TCS | xxx |
| (=) | Assessed Tax | xxx |
Different Related Factors relating to Advance Tax
- In case Advance Tax paid by the Assessee is greater than his precise Earnings Tax Legal responsibility, he can declare Refund of Earnings Tax by furnishing the small print of tax deposited within the Earnings Tax Return.
- If the Tax is paid in the identical yr wherein the Earnings is being earned – it’s referred to as Advance Tax. Nonetheless, in case the advance tax is just not paid on time and is paid within the subsequent monetary yr – it’s referred to as Self Evaluation Tax.
- On-line Cost of taxes is compulsary for all firms in addition to for taxpayers liable to tax audit. All different taxpayers can both deposit the tax on-line or bodily by means of financial institution branches by means of Challan No. 280.
- After making the fee of 1st or 2nd or third installment of advance tax (because the case could also be), if there’s a change within the tax legal responsibility, then the taxpayer can revise the quantum of advance tax within the remaining installments and pay the tax as per revised estimates.
- To assist taxpayers correctly compute their Advance Tax legal responsibility and the curiosity relevant thereon, the Earnings Tax Dept has additionally ready a web based advance tax calculator which could be accessed by means of this hyperlink – http://www.incometaxindia.gov.in/pages/instruments/advance-tax-calculator.aspx
- The advance tax collections additionally assist the Govt in ascertaining the expansion of the financial system as in improve within the Advance Tax numbers signifies that the financial system is rising and vice-versa.