1.Who pays advance tax?

2.When do you pay advance tax?

3.How are advance tax installments calculated?

4.What happens in case of nonpayment/short payment?

Advance Tax

As per Sec. 208

Advance tax is payable by a person if his total advance tax liability in a previous year is Rs. 10,000/- or more. (This tax is also called as assessed tax i.e total tax payable less T.D.S.) This advance tax has to be paid during the previous year itself in which the income is earned even though the income is assessed and chargeable in the next year i.e. assessment year
Advance Tax

P.Y.2012 2013 Due Date of Filing of Return 31/07/2013 For e.g. Net Total Income: Rs.10,00,000 Tax + Cess : Rs. 1,33,900 File ROI on 31/07/2013 Pay Advance Tax on or before 31/03/2013 Net Total Income : Rs. 2,50,000 Tax + Cess: 5,150 File ROI on 31/07/2013 No need to pay Advance Tax on or before 31/03/2013. It may be paid while filing the return Since Advance tax liability <10,000
Advance Tax

However Advance tax is not payable by a resident senior citizen (min. 60 yrs .or more during the previous year) if he does not have any income under the head "Profit and Gains of Business or Profession In other words..senior citizens earning Business income have to pay adv tax if greater than or equal to 10,000

Advance Tax

As per Sec 209 STEP: 1.Estimate current total income (all 5 heads as well as agricultural income for rate purposes) 2. Compute tax(surcharge if applicable and ed. cess) 3. Give relief U/s 89(1) if applicable 4. Deduct the TDS/TCS deducted or to be deducted 5. The balance amt. if Rs.10,000/- or more is payable as advance tax

Advance Tax

Sec 210 This advance tax should be computed either by the assessee on his own accord.

Alternatively, the assessing officer is empowered to pass an order and issue notice of demand requiring an assessee to pay advance tax for a financial year. Such notice can be passed at any time on or before the end of February of the current year.

Advance Tax

For the purpose of his computation of advance tax, the Assessing officer may adopt the Higher of: 1)Total Income of the latest previous year in respect of which assessee has been assessed under regular assessment Or 2)Total Income returned by the assessee for any subsequent previous year (after regular assessment) If the assessee's estimate is lower as compared to the Assessing Officer's,he will submit his own estimate to the Assessing Officer and pay advance tax accordingly. and if his own estimate is higher,then he voluntarily pays higher advance tax as per his estimate.
Advance Tax

Sec 211 In case of corporate assesses

Due Date On or before 15th June of the previous year On or before 15th Sept. of the previous year On or before 15th Dec. of the previous year On or before 15th March of the previous year Installment upto 15% (Total Adv. tax liability) upto 45% (Total Adv. tax liability) upto 75% (Total Adv. tax liability) upto 100% (Total adv. tax liability)
Advance Tax

For e.g.

X Ltd.(Indian co.)has business income of Rs.80,000 , F.D. Interest (I.F.O.S.) of Rs.20,000 and TDS of Rs.2,000

Estimated Net Total Income Tax @ 30% Add: Ed. Cess @ 3% Total Tax Liability Less: TDS Advance Tax Payable

1,00,000 30,000 900 30,900 2,000 28,900

Advance Tax

Installments On or before 15/06/2012 On or before 15/09/2012 Pay 15%(28,900) i.e. Rs.4,335 Pay 45%(28,900) i.e.Rs.13,005

Pay After considering amount paid earlier So Rs.13,005 Rs.4335 = Rs.8,670 On or before 15/12/2012 Pay 75%(28,900) i.e.Rs.21,675

Pay After considering amount paid earlier So Rs.21,675 - (Rs.4335 + Rs.8,670) = Rs.8,670 On or before 15/03/2013 Pay 100%(28,900) i.e.Rs.28,900

Pay After considering amount paid earlier So Rs.28,900 - (Rs.4335 + Rs.8,670 + Rs.8,670) = Rs.7,225
Advance Tax

In case of Non Corporate assessee (Individual, HUF, Firms etc. except Company.)

Due Date On or before 15th Sept. of the previous year On or before 15th Dec. of the previous year On or before 15th March of the previous year

Installment upto 30% (Total Adv. tax liability) upto 60% (Total Adv. tax liability) upto 100% (Total adv. tax liability)

Advance Tax

For e.g.

Mr. X has business income of Rs.3,80,000 , F.D. Interest (I.F.O.S.) of Rs.20,000 and Estimated Deductions of Rs.50,000 and TDS of Rs.2,000
Gross Total Income Less: Deduction U/Ch VIA Estimated Net Total Income Tax at slab rates Add: Ed. Cess @ 3% Total Tax Liability Less: TDS Advance Tax Payable 4,00,000 50,000 3,50,000 15,000 450 15,450 2,000 Rs.13,450
Advance Tax

Installments

On or before 15/09/2012 On or before 15/12/2012

Pay 30%(13,450) i.e.Rs.4,035 Pay 60%(13,450) i.e.Rs.8,070

Pay After considering amount paid earlier So Rs.8,070 - Rs.4,035 = Rs.4,035 On or before 15/03/2013 Pay 100%(13,450) i.e. 13,450

Pay After considering amount paid earlier So Rs.13,450 - (Rs.4035 + Rs.4035) = Rs.5,380

Advance Tax

Any shortfall while paying any of the installments should be adjusted in the next installment and if the entire amt. is not paid by 15/03,the balance should be paid by 31st March.

Any payment before 31st March will be considered as advance tax though it may be liable for interest due to short payment or deferment in payment of installments.

Advance Tax

Interest will be charged u/s 234B and u/s 234C

Interest U/S 234B

Interest U/S 234B is chargeable on nonpayment of advance tax. Rate of Interest: 1% per month or part of a month Amt. on which calculated : Assessed tax less Advance tax actually paid upto 31/03/13 (Assessed tax is advance tax actually payable.i.e. total tax less T.D.S.) Contd.
Advance Tax

Period :From 01/04/2013 till the date of actual payment of tax/date of determination of income under assessment . Note : Interest U/S 234B is not leviable if the assessee has paid atleast 90% of the assessed tax as advance tax For e.g. Mr. X has business income of Rs.3,80,000 , F.D. Interest (I.F.O.S.) of Rs.20,000 and Estimated Deductions of Rs.50,000 and TDS of Rs.2,000
Gross Total Income Less: Deduction U/Ch VIA Estimated Net Total Income Tax at(Slab Rates) Add: Ed. Cess @ 3% Total Tax Liability Less: TDS Advance Tax Payable 4,00,000 50,000 3,50,000 15,000 450 15,450 2,000 Rs.13,450
Advance Tax

So adv tax installments should be (as discussed earlier)

On or before 15/09/2012 On or before 15/12/2012 On or before 15/03/2013

30% i.e. Rs.4,035 60% i.e. Rs.8,070 100% i.e. Rs.13,450

Suppose ,Mr. actually pays advance tax as follows 10/09/2012 14/12/2012 10/3/2013 Total tax paid Rs.2,000 Rs.2,000 Rs.1,000 Rs.5000

Advance Tax

Advance Tax Paid On or before 15/09/2012 On or before 15/12/2012 On or before 15/03/2013 Rs.2000 Rs.4000 (2000+2000) Rs.5000(2000+2000+1000) Rs.13,450 Rs. 5,000 Rs.8,450

Assessed tax(i.e. Total adv. tax payable) Less: Advance Tax paid Balance Tax Payable

Suppose he files his return on income on 31/07/2013 and pays this tax at the same time, he will have to pay Tax Payable Add: Interest u/s 234B (on 8400 @1% for 4 months) (From 01.04.2013 to 31.07.2013) Rs.8,450 Rs. 336 Rs.8,786
Advance Tax

Suppose, he has to pay this amt. on assessment ,then interest will be calculated till the date of assessment.

Pls. note: 1)As per Rule 119A While calculating interest, tax is always rounded off to the nearest hundred on 8,400/- and not on 8,450) ignoring any fraction, hence we calculate

2)Even if the tax was paid on say 10th of July, interest will be calculated for whole four months and not for ten days of July because even fraction of a month is considered as a whole month while calculating interest.

Advance Tax

Interest U/S 234C Interest U/S 234C is chargeable on deferment in payment of advance tax installments (i.e. installments not paid correctly during the year) Rate of Interest: 1% per month or part of a month Amount on which calculated : Advance tax installment payable less advance tax installment paid Period: 3 months in case of the first installment (15/09 to 15/12) 3 months in case of the second installment (15/12 to 15/03) 1 month in case of the last installment (15/03 to 31/03) (In case of a company, it will be 3 months for the first 3 installments and 1 month for the last installment)
Advance Tax

Lets Take the same e.g. in which Ad. Tax Payable on or before 15/09/2012 on or before 15/12/2012 on or before 15/03/2013 4,035 Ad. Tax Paid 2,000 Shortfall 2,035
2000 (1% for 3 months) 4000 (1% for 3 months) 8400 (1% for 3 months)

Interest 60

8,070

4,000

4,070

120

13,450

5,000

8,450

84

Total Interest

264

Advance Tax

So carrying forward the same e.g. if Mr. pays tax on 31/07/2013 he will have to pay

Balance Tax Add: Interest U/S 234 B Add: Interest U/S 234 C Total Amount

Rs.8,450 Rs. 336 Rs. 264 Rs. 9,050

Rate of Interest : 1% per month or part of a month Amount on which calculated : Assessed tax less Advance tax actually paid upto 31/03/13

Advance Tax

Exemption from Interest U/S 234C under special circumstances

Since it is not possible to estimate capital gains and casual income, it has been provided that Interest U/S 234C is not payable if the shortfall is due to underestimation or non estimation of capital gains or casual winnings (lottery,gambling,races etc) and the assesee has paid the whole amt. of tax in respect of such income as part of the remaining installments of advance tax.

Advance Tax

1)Who pays advance tax? If assessee's assessed tax liability is 10,000 or more 2)When do you pay advance tax? 3 installments (noncorporate) 4 installments (corporate) 3)How are advance tax installments calculated? Total Tax on estimated net total income less TDS 4)What happens in case of nonpayment/short payment? Interest U/S 234B and Interest U/S 234C
Advance Tax

Advance Tax