ADVANCE TAX (Income Tax)

ADVANCE TAX [SECTION 211]

What is the Income liable for advance tax ?	All income (including capital gains, winnings from lotteries, crossword puzzles, etc.).
Who are not Required to Pay Advance Tax ?	-Resident individuals who are over 60 years of age and do not have income chargeable under the head ‘Profits and Gains of Business or Profession’ are not required to pay advance tax. -No advance tax is payable in case of assessees covered under section 44AD.
When is one liable to pay advance tax ?	When the advance tax payable for the year is Rs. 10,000 or more.
How To calculate the Advance tax ?	·     An assessee who is liable to pay advance tax will be required to estimate his current income and pay advance tax thereon without having to submit any estimate or statement of income to the assessing authorities. ·      After making payment of first/second instalment of advance tax the assessee can revise the remaining instalment(s) of advance tax in accordance with his revised estimate of current income and pay tax accordingly without any requirement of filing the revised estimate of advance tax. ·      COMPUTATION OF TAX - Tax can be computed on the current income (estimated by the taxpayer) at the rates in force during the financial year. From the tax so computed, tax deducted or collected at source will be deducted. Calculation can be made on similar lines in the case of upward/downward revision of current income.
When is advance tax to be paid ?
	In case of non-corporate assessees
	Due date of instalment	Amount payable
	On or before September 15	Not less than 30% of advance tax
	On or before December 15	Not less than 60% of advance tax, as reduced by the amount, if any, paid in the earlier instalment.
	On or before March 15	The whole amount of advance tax as reduced by the amount(s), if any, paid in the earlier instalment(s).
	In case of corporate assessees
	Due date of instalment	Amount payable
	On or before June 15	Not less than 15% of advance tax.
	On or before September 15	Not less than 45% of advance tax as reduced by the amount paid in the earlier instalment.
	On or before December 15	Not less than 75% of advance tax as reduced by the amount paid in the earlier instalments.
	On or before March 15	The whole amount of advance tax as reduced by the amount paid in the earlier instalments.
How to Estimate the Advance tax ?	- First instalment ·   Make an estimate of current year’s income (the estimate is not required to be filed with the tax authorities). ·   Deduct all allowable deductions under Chapter VIA. ·   Compute the tax on the remaining income at the rates in force during the financial year. ·   From such tax deduct the tax deducted at source. ·   The residue is the advance tax payable and appropriate percentage thereof along with surcharge, if any, should be deposited in any authorised bank along with a duly filled in advance tax challan. - Subsequent instalments ·      Check if estimate of income made earlier needs revision. ·      If not, deposit appropriate amount of second, third or fourth instalment of advance tax payable in any authorised bank along with duly filled in advance tax challans. ·      If estimate of income needs revision then make a revised estimate following the procedure under ‘First instalment’. ·      Determine advance tax payable in subsequent instalments after deducting amount paid in earlier instalments. ·      Deposit such advance tax in any authorised bank along with duly filled in advance tax challans.
If Tax is Paid before 31st March of the Financial Year will it be treated as Advance tax ?	Any amount paid by way of advance tax on or before 31st March shall also be treated as advance tax paid during financial year ending on that day.
What is the Provision if the Income is received without Deduction of Tax at Source ?	Section 209 has been amended with effect from 1-4-2012 to provide that where a person has received any income without deduction or collection of tax, he shall be liable to pay advance tax in respect of such income.
Can the Assessing Officer ask to Pay the Advance tax ?	·    If, despite the legal obligation cast upon a taxpayer (who had earlier been assessed to income-tax), he fails to pay advance tax (or advance tax is lower than the correct amount), the Assessing Officer may pass an order requiring him to pay advance tax on his current year’s income (specifying the amount of instalments in which tax has to be paid). Such an order must be passed during the financial year but not later than the last day of February. ·         With effect from 1-6-2002 Assessing Officer has been empowered to issue notice for payment of advance tax to any person and not necessarily only to persons who have not paid advance tax. Thus, Assessing Officer by an order in writing may require any person (even if he has paid some advance tax) liable to pay advance tax if he is of opinion that such person has not paid any of the specified instalments of advance tax by the dates specified under section 211. ·         On receipt of the notice from the Assessing Officer to pay advance tax the assessee can submit his own estimate of lower current income/advance tax and pay tax accordingly. In such a case he has to send an intimation in Form No. 28A to the Assessing Officer. ·         Alternatively, if the advance tax on current income as per own estimate of the assessee is likely to be higher than the amount estimated by the Assessing Officer, the assessee shall pay higher tax in accordance with his own calculation. In such case, no intimation to the Assessing Officer is required. ·         COMPUTATION OF TAX BY ASSESSING OFFICER - The total income of the latest previous year in respect of which the assessee has been assessed by way of regular assessment or the total income returned by the assessee in any return of income furnished by him for any subsequent previous year whichever is higher, shall be taken as current income by the Assessing Officer. ·         Tax on the current income at the rates in force during the financial year minus tax deducted or collected at source, is the amount of advance tax payable by the assessee. Calculation can be made on similar lines when the assessee wants to make upward/downward revision of current income.
What to Do when the Order for Payment of Advance tax is received from Assessing Officer ?	·   Check whether order has been passed during the financial year but before February 28. ·   Check whether income estimated by Assessing Officer (on basis of latest assessed income or latest returned income of assessee) is correct. ·   If it is, advance tax should be paid by the assessee on the basis of the order of the Assessing Officer. No intimation to the Assessing Officer is required to be submitted. ·   If assessee estimates his current income to be higher than that estimated by Assessing Officer, he has to pay advance tax on the basis of his own estimate. No intimation to the Assessing Officer is required to be submitted. ·   If assessee estimates his current income to be lower than that estimated by the Assessing Officer, he should submit his own estimate of current income to the Assessing Officer (in Form 28A) and pay tax accordingly.
Can the Assessing Officer Revise his Order for Payment of Advance Tax?	·      The order passed by the Assessing Officer to pay advance tax can be revised by him, under section 210(4) if subsequent to the making of an order to pay advance tax but before March 1 of the relevant financial year, a return of income in respect of any later year has been furnished or any assessment for any later year has been completed at a higher figure. On receipt of the revised order the assessee will have to pay advance tax accordingly. ·  The assessee can, however, submit his own estimate of lower current income/advance tax and pay tax accordingly. In such a case he has to send an intimation in Form No. 28A to the Assessing Officer. ·      If, alternatively, the advance tax on current income as per own estimate is likely to be higher than the amount re-estimated by the Assessing Officer, the assessee shall pay higher tax in accordance with his own calculation. In such a case intimation to the Assessing Officer is not required. ·      COMPUTATION OF TAX - The total income declared in the return furnished by the assessee for the later previous year or total income in respect of which the regular assessment is made after passing an order by the Assessing Officer but before March 1, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year. From the tax so determined, tax deducted at source will be deducted.