Article on Provision of Payment Advance Tax as Per Chapter XVII-C | Provision of Payment Advance Tax | Payment of Advance Tax as per Income tax Act |Due Dates of payment Advance

Provision of Payment Advance Tax as per Income Tax

Provision of Payment Advance Tax Advance tax means income tax should be paid inadvance instead of lump sum payment at year end. Advance Tax payments have to be made in installments as per due dates provided in Section 211 of Income tax act.

Definition of Advance Tax

Section 2 (1) Income tax Act– “Advance Tax” Means the Advance tax payable in accordance with the provisions of Chapter XVII-C of Income Tax Act.

Chapter XVII-C- Provision of Advance Tax divided in section 207 to 219.

Section 207- Income Tax shall be payable in advance during any F.Y, in accordance with the provisions of section 208 to 219,in respect of the total income of the assesses which would be chargeable to tax for the A.Y immediately following that F.Y, such income being hereafter in this Chapter (XVII-C of Income Tax Act) referred to as “current income”

Liability of Advance Tax

Salaried, Self Employed, Businesses- As per section 208 every person whose estimated tax liability for the year exceeds Rs. 10,000.00 shall pay his tax in advance in the form of “advance tax”. Thus, any taxpayer whose estimated tax liability for the year exceeds Rs. 10,000.00 has to pay his tax in advance by the due dates provided in Section 211 of Income tax act.

However, as per Sub Section 1 of Section 207 if a person satisfies the following conditions, he will not be liable to pay advance tax.

1. He is an individual
2. He is resident in India as per the Income-tax Act
3. He is of the age of 60 years or above at any time during the year
4. He is not having any income chargeable to tax under the head “Profits and gains of business or profession

Example-

1. Question– Mr. A aged-65 year and resident of India as per income tax, earning rental Income 5,40,000.00 in year. He does not have any other head Income. Will Mr. A be liable to pay advance tax?

Answer–  Mr. A will not be liable to pay advance tax. Because Mr. A is an individual. He is resident in India as per the Income-tax Act. his age above 60 years. he is not having any income chargeable to tax under the head “Profits and gains of business or profession”.

2. Question– Mr. A aged-55 year and resident of India as per income tax, earning rental Income 5,40,000.00 in year. He does not have any other head Income. Will Mr. A be liable to pay advance tax?

Answer–  he will liable to payment of advance tax, Because His age is 55 years. He satisfies all the conditions except the age criteria of 60 years or above at any time during the year.

Question-A Pvt. Ltd, , owns a property in Mumbai. Earns rental income of 6,00,000.00 per year for this property. The company is not having any other head Income. Will the Pvt. Ltd Company liable to pay advance tax?

Answer– The Company will be liable to payment of advance tax. Because In this case taxpayer is a Pvt. Ltd. Company. and The exemption from payment of advance tax as per Sub Section 1 of Section 207 is available to a resident individual who is of the age of 60 years or above and who does not have income chargeable to tax under the head “Profits and gains of business or profession”.

Presumptive businesses for F.Y- 2014-15 & F.Y 2015-16:- Taxpayers who opt for presumptive Scheme where business income is assumed at 8% of turnover are exempt from advance tax for F.Y 14-15 and F.Y 15-16.

Presumptive income for businesses for F.Y 2016-17:- Starting F.Y taxpayers who opt for presumptive scheme have to pay whole amount of their advance tax in one installment on or before 15th March. If they pay all of their tax dues by 31st March that is also ok. Starting F.Y 16-17. Business with turnover of 2 crores or less can opt for this scheme.

Presumptive income for Professionals  for F.Y 2016-17:- Starting FY 16-17, this scheme has been extended to professionals such as doctors, lawyers, architects etc. if their gross receipt are 50 lakhs or less (Section 44ADA of Income Tax). Such taxpayers have to pay advance tax as per quarterly installments.

Due Dates and Instalments of payment of Advance Tax as per Section 211 (Provision of Payment Advance Tax)

Advance tax on the current income calculated in the manner laid down in section 209 shall be payable by-

 For both individual and corporate taxpayers (FY 2017-18 & FY 2016-17)   

 For taxpayer who have opted for Presumptive Taxation Scheme- Business income 

For taxpayers opting for presumptive taxation having business income from plying, hiring or leasing of goods carriages Section 44AE .

For F.Y 2014-15 & FY 2015-16(Provision of Payment Advance Tax)

Note- All the assesses (other than corporate taxpayers), who are liable to pay the same, in three installment during each financial year and the due date of each installment and the amount of such installment shall be as specified in Table II Below(Provision of Payment Advance Tax)

Table-II

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