Advance Tax Provisions, Payment Challan, e-payment Utility

Advance Tax

Advance Tax Provisions, Payment Challan, e-payment Utility & Examples

Advance Tax

Advance Tax Provisions

Advance tax is also known as ‘Pay as you earn’ scheme. Advanc-tax should be paid in advance in installments as per due dates instead of lump sum payment at the end of the relevant financial year. As per section 208, any person whose estimated tax liability for the year is Rs. 10,000 or more shall, in the form of ‘advance-tax’ pay his tax in advance.

However, a resident senior citizen not having any income from business or profession is not liable to pay advance tax. Taxpayers who have opted for the presumptive scheme are also exempt from advance-tax. Instead, they have to pay the whole amount of tax in one installment on or before 15th March. They can also pay their taxes by 31st March of the relevant FY. However, professional taxpayers who have opted for the presumptive scheme have to pay advance tax as per quarterly installments.

Under section 207, only the individual senior citizens are exempted from the payment of advance-tax. Thus, a HUF cannot claim exemption under this section.

Payment challan

Challan 280 allows taxpayers to pay their income tax online on the Income Tax Department website of India. The taxpayers can select this challan and fill the form and then use it to pay taxes online/offline. For paying the advance tax offline, they have to download challan 280 form from the website and submit it to the bank after filing it.

The taxpayer can pay advance-tax through tax payment challan at authorized bank branches by the Income Tax Department like ICICI Bank, Reserve Bank of India, HDFC Bank, Syndicate Bank, State Bank of India, etc. The taxpayer can also pay advance tax online through Income Tax Department or the National Securities Depository.

To pay the advance tax online, the taxpayer needs to visit the official government website. He needs to select the right challan and fill in the correct details in the form. After that, the website will redirect him to the bank’s net banking page. After paying the amount, he shall get the details of the payment including the challan number.

However, if the taxpayer fails to pay the advance tax by the first deadline, then he has to pay advance tax along with interest at 1% on the defaulted amount for every month until the tax is paid off completely.

Due date for payment of advance tax

Status

By 15th June

By 15th September

By 15th December

By 15th March

All assesses other than eligible assesse as referred to in section 44AD

Up to 15% of advance-tax

Up to 45% of advance tax

Up to 75% of advance tax

Up to 100% of advance tax

In case of eligible assesse as referred to in section 44AD

Nil

Nil

Nil

100% of advance tax

If the last day for payment of any installment of advance-tax is a day on which the banks are closed, then the taxpayer shall pay the advance-tax on the immediately following working day.

Refund

The taxpayers can claim the refund by filling and submitting Form 30 within a period of one year from the last year of the AY.

Example 1:

Ms. Avantika is a doctor whose estimated tax liability for the year 2016-17 is Rs. 1 lakh. Thus, she is liable to pay advance tax as her tax liability is more than Rs. 10000. The due dates for different installments of advance tax payment are as under:

Status

By 15th June

By 15th September

By 15th December

By 15th March

All assesses other than eligible assesse as referred to in section 44AD

Up to 15% of advance-tax

Up to 45% of advance tax

Up to 75% of advance tax

Up to 100% of advance-tax

In case of eligible assesse as referred to in section 44AD

Nil

Nil

Nil

100% of advance tax

She cannot claim the benefit under presumptive taxation U/S 44AD as she does not earn income from business. She has to pay advance tax in installments as on below dates.

  • 15% of her tax liability i.e. Rs. 15,000 by 15th
  • 45% of her tax liability i.e. Rs. 45,000 minus already paid 1st installment of Rs. 15000. She has to pay Rs. 30,000 for the 2nd installment by 15th
  • 75% of her tax liability i.e. Rs. 75,000 minus already paid above installments of Rs. 15,000 and Rs. 30,000. She has to pay Rs. 30,000 for the 3rd installment by 15th
  • The final and the fourth installment is 1 lakh minus already paid installment i.e. 1 lakh minus Rs. 75,000. Thus, she will have to pay Rs. 25,000 for the fourth and final installment on or before 15th

Example 2:

Mr. Vijay opts for presumptive scheme U/S 44AD of the Income Tax act and has the annual turnover of Rs. 80 lakhs. Thus, he declares his income at around 8% of the turnover. He is liable to pay advance-tax in regard to the business covered U/S 44AD on or before 15th March.

 

Bookmark For More Update

Related posts

Leave a Comment