Advance_Tax

ADVANCE PAYMENT OF TAX

Liability for Payment of Advance Tax

• Sections 207 & 208:

  • Tax is due to be paid in advance for the financial year (F.Y.) concerning the total income that will be chargeable for the assessment year (A.Y.) following that F.Y.

  • Advance tax must be paid within a F.Y. if the total amount payable exceeds Rs. 10,000.

  • An individual resident aged 60 years or older during the previous year with no income under the head Profit and Gains of Business or Profession (PGBP) is exempt from paying advance tax.

Instalments of Advance Tax and Due Dates

• Section 211:

  • For corporates and non-corporates (excluding those under section 44AD or section 44ADA) - Payments are made in four instalments:

  Due Date	Amount Payable
  On or before 15th June	Not less than 15% of total advance tax liability.
  On or before 15th Sept	Not less than 45% of total advance tax liability minus previous instalments.
  On or before 15th Dec	Not less than 75% of total advance tax liability minus previous instalments.
  On or before 15th Mar	Total advance tax liability minus previous instalments.

Payment by Assessees Computing Profits on Presumptive Basis

• For assessees calculating profits under section 44AD(1) or section 44ADA(1):

  • Full advance tax must be paid by 15th March.

  • Any advance tax paid on or before 31st March is regarded as valid for that F.Y.

Interest for Defaults in Payment of Advance Tax

• Section 234B:

  • Interest applies for non-payment of advance tax or if less than 90% of the assessed tax is paid.

  • Interest is calculated at 1% per month from 1st April following the F.Y. until assessment completion under section 143(1).

  • Calculated on the difference between assessed tax and advance tax paid.

  • Assessed Tax: Tax on total income per section 143(1), minus TDS, TCS, reliefs, and any relevant tax credits. It does not include any additional income-tax under section 140B.

  • If self-assessed tax is paid under section 140A, interest is calculated till payment date, minus any prior interest paid.

Interest for Deferment of Advance Tax

• Section 234C:

  • Applies to assessees who are not using sections 44AD(1) or 44ADA(1) standards:

  • Interest is applicable if advance tax paid does not meet the percentage of total tax due on returned income by specified dates:

  Specified Date	Specified %	Shortfall in Advance Tax	Period
  15th June	15%	15% of tax due - advance tax paid till this date	3 Months
  15th September	45%	45% of tax due - advance tax paid till this date	3 Months
  15th December	75%	75% of tax due - advance tax paid till this date	3 Months
  15th March	100%	100% of tax due - advance tax paid till this date	1 Month

Other Provisions

• If advance tax payments meet specified thresholds, interest penalties may not apply:

  • Before 15th June or 15th September, payments should not be less than 12% or 36% of tax due to avoid interest.

• Tax Due on Returned Income:

  • It's calculated as total income tax less TDS, TCS, and specific reliefs allowed, including sections 89, 90, or 91, as well as tax credits under sections 115JAA or 115JD.

Special Cases Exempt from Interest under Section 234C

• Interest is not applicable for shortfalls due to underestimation of income:

  • Capital gains

  • Lottery winnings and similar income types

  • First-time income under PGBP

  • Dividend income (not deemed dividends under section 2(22)(e))

• However, full tax must be paid as if that income was part of the total for the remaining advance tax instalments or by 31st March of the F.Y.hjjj