ADVANCE TAX

[Mr. M. GOVINDARAJAN]

                        Section 208 of the Income Tax Act, 1961 (‘Act’ for short) provides that advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of the Act, is Rs.10000/- or more.  Senior citizen, a resident individual who is at least 60 years of age at any time during the financial year and not having any income from business or profession is not liable to pay advance tax.   Like that an assessee who has opted for the scheme of computing business income under Section 44AD on presumptive basis at the rate of 8% of the turnover is also exempted from payment of advance tax with effect from the assessment year 2011-12.

                        The advance tax shall be payable by the assessee on his own accord if his tax liability exceeds as per Section 208 of the Act.   Advance tax, in some case, is payable in pursuance of order of Assessing Officer.  In case of assessee paying tax on his own accord shall first estimate his current income and income tax at the rates in force in the financial year.   The statement of estimation is not required to be sent to the department for the payment of advance tax. In the subsequent payment an assessee may be required to prepare revised estimate.   In this estimate the tax already paid may be deducted.  Such revised estimate is also not required to be sent to the department.    The due date for payment of tax is provided in Section 211.  There are two categories prescribed for this purpose.   One is companies and the other is other than companies.  The companies are required to pay advance tax in four installments at the prescribed rate and the other group requires paying advance tax in three installments at the prescribed rate as per the details given below:

Sl. No.	Due Date of Installment	CATEGORY
		Companies	Other than
			companies
1	On or before 15th June	Not less than 15% of
		such advance tax	NIL
2	On or before 15th	Not less than 45% of	Not less than 30%
	September	such advance tax as	of such advance tax
		reduced by the amount
		if any paid in earlier
		installment
3	On or before 15th	Not less than 75% of	Not less than 60% of
	December	such advance tax as	such advance tax, as
		reduced by the amount,	reduced by the amount
		or amounts, if any paid	if any paid in earlier
		in the earlier installment	Installment.
		or installments
4	On or before 15th March	The whole amount of	The whole amount of
		such advance tax as	such advance tax as
		reduced by the amount	reduced by the amount
		of amounts, if any, paid	of amounts, if any, paid
		in the earlier installment	in the earlier installment
		or installments.	or installments.

Any amount paid by way of advance tax on or before 31^st March, shall also be treated as advance tax paid during the financial year ending on that day for all the purposes of this Act.  If such payment is made after the end of the financial year then it will not amount to advance tax for the preceding year.  If the due date for payment of advance tax is a holiday the assessee can make payment on the next immediately following working day. 

                        The Corporate assessees and other assessees who are subject to compulsory audit under Section 44AB are to pay tax electronically.  It is at the option of the assessee to make electronic payment.  An assessee can also make payment from the account of any other person.  In such cases the challan number shall indicate the PAN of the assessee on whose behalf the payment is made.

                        An assessee who had earlier been assessed to income tax failed to pay advance tax, then the Assessing Officer may pass an order under Section 210(3) of the Act requiring him to pay advance tax on his current year’s income in Form No. 28.   The order must specify the different installments in which the advance tax should be paid.  Such order may be passed during the previous year but not later the last day of February.   On receipt of notice the assessee can submit his estimate of lower income or advance tax and pay the tax with intimation in Form 28A to the Assessing Officer.   Such estimate cannot be rejected by the Department.    If the assessee is likely to pay more than the amount as estimated by the Assessing Officer, the assessee shall pay higher tax and in such cases no intimation is required to be given to the Department.  The Assessing Officer is having power to revise the order under Section 210(3). taxmanagementindia.com

                        If an assessee who is liable to pay advance tax, has failed to pay such tax he is liable to pay interest @ 1% on the assessed tax (‘assessed tax’ means the tax on total income determined under Section 143(1) or on regular assessment as reduced by tax deducted or collected at source.  MAT or AMT credit and relief under Section 90/90A/91 will be further deducted) for every month or part of month from April 1 of the assessment year to the date of determination of income under Section 143(1) and where a regular assessment is made to the date of such regular assessment. 

                        An assessee, who has paid advance tax but the amount of advance tax paid by him is less than 90% of assessed tax, he is liable to pay interest on assessed tax minus advance tax paid by him, @ 1% for every month or part of month from April 1 of the assessment year to the date of determination of income under Section 143(1) and where a regular assessment is made to the date of such regular assessment.

                        Interest may be waived or interest may be reduced where any income accrues or arises for any previous year due to the operation of any order of a Court, statutory authority or of the Government (other than the order of assessment, appeal, reference or revision) passed after the close of the said previous year by the Chief Commissioner/Director General subject to the conditions that-

• The relevant income is disclosed in a return of income furnished for the said previous year or is otherwise disclosed to the Assessing Officer; and
• The tax attributable to such income has been paid.

Interest reduction or waiver is given for the following period:

• For the interest under Section 234A from the date immediately following the due date for furnishing the return of income for the relevant assessment year till the end of the month in which the relevant order giving rise to the relevant income is passed;
• For the interest under Section 234B, from the first day of April of the relevant assessment year till the end of the month in which the relevant order giving rise to the relevant income is passed;
• For the interest under Section 234C, for the period mentioned in that section.

Chief Commissioner/Director General (Investigation) are having power to reduce penal interest under Sections 234A, 234B and 234C in the following circumstances:

• Where, in the course of search and seizure operation, books of account have been taken over by the Department and were not available to the tax payer to prepare his return of income;
• Any income other than capital gains which was received or accrued after the date of first or subsequent installment of advance tax, which was neither anticipated nor contemplated by the tax payer and on which advance tax was paid by the taxpayer after the receipt of such income;
• Where, as a result of any retrospective amendment of law or the decisions of the Supreme Court certain receipts which were hither to be treated as exempt become taxable.   Since no advance tax would normally be paid in respect of such receipts during the relevant financial year, penal interest is levied for the default in payment of advance tax;
• Where return of income is filed voluntarily without detection of the Department and due to circumstances beyond the control of tax payer such return of income was not filed within the stipulated period or advance tax was not paid at the relevant time.

Interest is payable to the assessee where any refund arises due to any excess payment of tax.  For this purpose there is no need for making claim of refund.