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How to Calculate Advance Tax, Due Dates and Payment

How to Calculate Advance Tax, Due Dates and Payment. In the previous article, we have given Due Date of Filing of TDS Returns. Today we are providing the complete details of advance tax I;e Meaning of advance tax, Who should pay advance tax, due dates of payment of advance tax, applicable rates, how to calculate advance tax (advance tax calculator) and how to pay online. Advance tax means income tax should be paid in advance instead of lump sum payment at year end. It is also known as pay as you earn tax. These payments have to be made in installments as per due dates provided by the income tax department.

How to Calculate Advance Tax, Due Dates and Payment

Who should pay Advance Tax?

If your total tax liability is Rs 10,000 or more in a financial year you have to pay advance tax. Advance tax applies to all tax payers, salaried, freelancers, and businessmen. Senior citizens, who are 60 years or older, and do not run a business, are exempt from paying advance tax.

Taxpayers who opt for a presumptive scheme where business income is assumed at 8% of turnover are exempt from advance tax for FY 2014-15 and FY 2015-16. However starting FY 2016-17, such taxpayers have to pay the whole amount of their advance tax in one installment on or before 15th March. The presumptive scheme is covered under section 44AD and 44AE. Starting FY 2016-17 businesses with a turnover of Rs 2crores or less can opt for this scheme. This scheme has been extended to professionals such as doctors, lawyers, architects etc starting FY 2016-17 if their receipts are 50lakhs or less.

Due Dates For Payment of Advance Tax FY 2016-17

For both individual and corporate taxpayers

Due Date Advance Tax Payable
On or before 15th June 15% of advance tax
On or before 15th September 45% of advance tax
On or before 15th December 75% of advance tax
On or before 15th March 100% of advance tax

Advance Tax Liability for the A.Y. 2017-18

Advance Tax provisions has been amended by the Finance Act 2016 (No. 28 of 2016) which is effective from 01-06-2016 for Assessment Year 2017-18. Following are major amendments related to Advance Tax Liability for A. Y. 2017-18:

(a) Section 211(1) is amended to provide that advance tax will be paid in four installments of 15%, 45%, 75% and 100% of tax payable on the current income by 15th June, 15th September, 15th December and 15th March, respectively in case of all assesses. Earlier up to AY 2016-17 the assessee other than corporate assessee paid Advance Tax in three Installment. Now all assessee except assessee covered u/s 44AD is treated at par for Advance Tax provisions.

(b) Assessees covered u/s 44AD are to pay advance tax of the whole amount in one installment on or before the 15th March of the financial year consequent upon raising of the turnover limit from Rs.1 crore to Rs. 2 crore.

Advance tax (Section 208, 209 & 211)

Advance tax is payable on all income during the financial year in every case where the amount of such tax payable by an assessee during that year is Rs. 10,000 or more.

Following is chart showing Advance Tax Liability for the A.Y. 2017-18:

Advance Tax Liability for All Assessee (other than covered under section 44AD of the I.T. Act 1961)

Due Date Installment Payable
 On or before 15th June 2016  Not less than 15% of advance tax.
 On or before 15th  September 2016  Not less than 45% of advance tax as reduced by the amount paid in the earlier installment.
 On or before 15Th December 2016  Not less than 75% of advance tax as reduced by the amount paid in the earlier installments.
 On or before 15Th March 2017  The whole amount (100%) of advance tax as reduced by the amount paid in the earlier installments.

Advance Tax Liability for Assessee covered under section 44AD of the I.T. Act 1961

Due Date Installment Payable
On or before 15th June 2016
On or before 15th  September 2016
On or before 15Th December 2016
On or before 15Th March 2017  The whole amount (100%) of advance tax as reduced by the amount paid in the earlier installments.

Advance tax rates for companies

Due Date For corporate taxpayers For individual taxpayers
On or before 15th June 15% of advance tax
On or before 15th September 45% of advance tax 30% of advance tax
On or before 15th December 75% of advance tax 60% of advance tax
On or before 15th March 100% of advance tax 100% of advance tax

How to Compute Advance Tax Liability ?

The Computation of Tax Liability for the determine Advance Tax is given in below table:

Particulars

Amount
Income from salary (Net) XXXXX
Income from house property (Net) XXXXX
Profits and gains of business or profession(Net) XXXXX
Capital gains(Net) XXXXX
Income from other sources(Net) XXXXX
Gross Total Income XXXXX
Less : Deductions under Chapter VI-A (u/s 80C to 80U)) (XXXXX)
Total Income (i.e., taxable income) XXXXX
Tax

on total income at applicable rates

XXXXX
Less : Rebate under section 87A (XXXXX)
Tax Liability After Rebate XXXXX
Add: Surcharge XXXXX
Tax Liability After Surcharge XXXXX
Add: Education cess @ 2% on tax liability after surcharge XXXXX
Add: Secondary and higher education cess @ 1% on tax liability after surcharge XXXXX
Tax liability for the year XXXXX
Less:  TDS (XXXXX)
Tax payable XXXXX
Advance Tax

(Above Tax) x (specified percentage u/s 211)

Click Here for advance tax calculator for financial year 2016-17.

Whether a Non-Resident Indian (NRI) or a Non-Resident is required to pay Advance Tax in India?

Yes. The advance tax is applicable on both Non-Resident Indian (NRI) or a Non-Resident if they have any income accrued during the year in India.

How can I pay income tax? / What are the mode of payment of Advance Tax?

Advance Tax can be deposited through cash, cheque and electronic mode (Debit Card/Credit Card). The challan specified for advance tax is ITNS 280. All designated branches of banks empanelled with the Income Tax Department are accepted the advance tax. Assessee can pay Advance Tax Online through TIN-NSDL website.

What are the penal consequences in case of failure to deposit Advance Tax within prescribed time?

If advance tax is not paid or the amount of advance tax paid is less than 90% of the assessed tax, the assessee shall be liable to pay simple interest @1% p.m. u/s 234B from 1st day of assessment year up to the date of deposit tax & interest. Further u/s 234C if the payment of advance tax is deferred beyond the due dates, interest @1% p.m., for a period of 3 months, will be payable for every deferment, except for the last installment of 15th March where it will be 1% for one month.

How can assessee verify the status of his tax deposition and other tax credit?

Due care should be taken with respect to PAN, Assessment Year and tax Code before depositing advance tax. The assessee may verify status his Advance Tax deposited through following links:

  • Form No.26 AS: The credit of tax depsoited would be reflected in Form 26AS within one week of making the payment.
  • NSDL e-Governance: Challan Status Inquiry can be made through OLTAS Application (NSDL) by visiting https://tin.tin.nsdl.com/oltas/index.html.

Can Income tax department issue notice to assessee for payment of Advance Tax ?

Yes. Assessing Officer may pass an order u/s 210(3) of the Income Tax Act 1961 or amended order u/s 210(4) and issue a notice of demand u/s 156 requiring assessee to pay advance tax.

Whether agricultural income would be included in total income for computing advance tax ?

Yes. Net agriculture income to be taken into account for computing advance tax in terms of section 209(2) of Income Tax Act, 1961.

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