Advance Tax Provisions
Liability to pay advance tax:
As per section 208, every person whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance, in the form of “advance tax”.
Person not liable to pay advance tax:
A resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession is not liable to pay advance tax.
Illustration-1
Q. Mr. Kumar is running a provision store. The turnover of the store for the financial year 2021-22 amounted to Rs. 1,84,00,000. He wants to declare income under section 44AD at 8% of the turnover. He does not have any other source of income. Will he be liable to pay advance tax?
Ans. A taxpayer opting for the presumptive taxation scheme of section 44AD is also liable to pay advance tax in respect of business covered under section 44AD.
Illustration-2
Q. Mr. Vipul (age 39 years) is running a medical store. The turnover of the store for the financial year 2021-22 amounted to Rs. 40,00,000. His accounts revealed a net profit of Rs. 2,60,000. Will he be liable to pay advance tax?
Due dates for payment of advance tax:
Advance tax is to be paid in different instalments. The due dates for payment of different instalments of advance tax are as follows:
| Status | By 15th June | By 15th September | By 15th December | By 15th March |
|---|---|---|---|---|
| All assessees (other than the eligible assessee as referred to in Section 44AD or section 44ADA) | Minimum 15% of advance tax | Minimum 45% of advance tax | Minimum 75% of advance tax | Minimum 100% of advance tax |
| Taxpayers who opted for presumptive taxation scheme of section 44AD or section 44ADA | Nil | Nil | Nil | Minimum 100% of Advance tax |
Note 1: Any tax paid till 31st March will be treated as advance tax.
Note 2: If the last day for payment of any instalment of advance tax is a day on which the banks are closed, then the taxpayer should pay the advance tax on the immediately following working day [Circular No. 676, dated 14-1-1994].
Payment of advance tax:
- Advance tax can be paid by the taxpayer either on his own account or in pursuance of an order of the Assessing Officer.
- The taxpayer who is liable to pay advance tax is required to estimate his current income and pay advance tax on his own account. In such a case, he is not required to submit any estimate or statement of income to the tax authorities.
- After making payment of first or second or third instalment of advance tax (as the case may be), if there is a change in the tax liability, then the taxpayer can revise the quantum of advance tax in the remaining instalment(s) and pay the tax as per revised estimates.
- 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 and the balance tax payable will be used to compute the advance tax liability. Also, relief of tax allowed under section 90 or section 90A or any deduction under section 91 or any tax credit allowed to be set off as per section 115JAA or section 115JD shall also be deducted while computing the advance tax liability.