Advance Tax Under Income Tax
According to Income Tax Act,1961 section 207 say that Tax shall be payable in advance during any financial year, in accordance with the provisions of section 208 to section 219 in respect of total income earn by assessee which would chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as “current income”.
The provisions of sub-section (1) shall not apply to an individual resident in India, who—
(a) does not have any income chargeable under the head “Profits and gains of business or profession”; and
(b) is of the age of sixty years or more at any time during the previous year.
Advance Tax is liable to pay as you earn so that entire tax liability does arise once in a year and Central Government also receive revenue after a certain interval of time.
Advance tax is liable to pay in 3 instalment for individuals and 4 instalment for companies.
Advance Tax section provision under various sections of Income Tax Act ,1961
1. Section 207 – Liability of advance tax;
2. Section 208 – Conditions to pay advance tax;
3. Section 209 – Computation of advance tax;
4. Section 210 – Payment of the advance tax by the assessee of his own accord or in pursuance of an order of assessing officer;
5. Section 211 – Installment of advance tax and due dates;
6. Section 219 – Credit of advance tax;
If assessee does not pay advance tax timely he is liable to interest under various section of Income Tax Act.1961
1. Section 234B – Interest for defaults in payment of the advance tax;
2. Section 234C – Interest for deferment of the advance tax.
Who liable to advance tax ?
Advance tax is payable during a financial year where the amount of tax payable is Rs 10,000 or more according to self calculation (section 208).
Exception:
(a) does not have any income chargeable under the head “Profits and gains of business or profession”; and
(b) is of the age of sixty years or more at any time during the previous year.
Mandatory to pay advance tax
Yes every assessee need to pay advance tax timely otherwise he is liable to pay Interest:
1. Section 234B – Interest for defaults in payment of the advance tax;
2. Section 234C – Interest for deferment of the advance tax.
How to calculate advance tax ?
Computation of Advance Tax ( section 209)
The Advance by an assessee in the financial year on his own according as per section 210(1) or 210(2) or 210(5) or 210(6) on the estimated current income shall be computed as follows
| Particulars | Amount Rs. | |
| Income from Salary | XXXXX | |
| Add | Income from House Property | XXXXX |
| Add | Income from Business and Profession | XXXXX |
| Add | Income from Capital Gain | XXXXX |
| Add | Income From Other Source | XXXXX |
| Less | Deduction Under chapter VIA | (XXXX) |
| Net Taxable Income | XXXXX | |
| Net Tax Payable on income | XXXX | |
| Add | Surcharge | XXXX |
| Add | Cess | XXXX |
| Total tax liability | XXXX | |
| Less | Rebate | (XXXX) |
| Less | TDS/TCS/MAT credit | (XXXX) |
| Advance Tax payable | XXXX |
Due date of Advance Tax
Due date of instalment of advance tax payable by all assessees other than covered under section 44AD or 44ADA ( Sections ( 211(1) (a): All the assessees other than the assessee referred to in clause (b) of section 211 (a) every assessee need to pay Advance Tax in four instalments during each financial year.
| Due date of instalment | Amount payable |
| On or before the15th June | Not less than 15% of such advance tax |
| On or before the 15th September | Not less than 45% of such advance tax as reduced by the amount if paid in the earlier instalment |
| On or before the 15th December | Not less than 75% of such advance tax as reduced by the amount if paid in the earlier instalment or instalments |
| On or before the 15th March | 100% of such advance tax as reduced by the amount if paid in the earlier instalment or instalments |
Conclusion:
Every assessee need to pay Advance tax if total tax Rs.10,000 or more on total income earn during the financial year.
Advance tax is payable in four instalments during the financial year 15th June,15th September,15th December,15th Merch. If Advance Tax not paid on prescribed due date than interest is liable to pay under section 234B and section 234C.