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Introduction: The Income Tax Department’s e-campaign on significant transactions aims to inform taxpayers about discrepancies between their advance tax payments and financial transactions for the fiscal year 2023-24. This article provides insights into advance tax, taxpayer obligations, payment methods, and late payment interest.

Q.1 Have you received this communication?

Ans. The Income Tax Department has received information on financial transactions relating to XXXX SINGH PAN XXXXX1650X for Financial Year 2023-24 (AY 2024-25). It is seen that your advance tax payment for F.Y. 2023-24 is apparently not commensurate with such financial transactions undertaken by you during this period. As part of taxpayer service initiative, this e-campaign aims to intimate you of some of the ‘significant transactions undertaken during F.Y. 2023-24:

Q.2 What is Advance Tax?

Ans. The payment of estimated tax liability ahead of time instead of paying in full at the conclusion of the accounting year is known as “advanced tax” in India. Taxpayers projecting a financial burden over Rs. 10,000 in a fiscal year are obligated to pay advanced tax. By June 15th, taxpayers must pay at least 45% of their projected tax bill; any remaining tax obligation must be paid by March 15th of the subsequent fiscal year.

Q.3 Who is required to pay advance tax?

Ans. Senior citizens: Those who do not own a business as well as are 60 years of age or above are not subject to paying advance tax. Consequently, advance tax filing is just necessary for senior individuals (60 years of age or over) who have business income.

Businesses, freelancers, and employees with salaries must pay advance tax if their entire tax liability for any specific fiscal year surpasses Rs 10,000. Businesses, freelancers, salaried individuals, and all other taxpayers are bound to the advance tax.

Presumptive income for businesses: By March 15 at the latest, taxpayers who opt to take advantage of section 44AD’s presumptive taxation plan need to pay the full amount of their advance tax in a single instalment.

Advance tax due date

The table below includes due date for both individual as well as corporate taxpayers

On or before 15th June 15% of advance tax
On or before 15th September 45% of advance tax (-) advance tax already paid
On or before 15th December 75% of advance tax (-) advance tax already paid
On or before 15th March 100% of advance tax (-) advance tax already paid

Sections 44AD & 44ADA – Business Income apply to taxpayers who have chosen to engage within the Presumptive Taxation Scheme.

On or before 15th March 100% of advance tax

Things to keep in mind:

  • In instances when the receiving bank is closed on the day that any advance tax instalment is due, the assessee can opt to pay the instalment on the next working day. In this situation, the mandatory interest due under sections 234B and 234C would not be enforced.
  • All tax payments in advance made by March 31st or before will be acknowledged as being submitted during the fiscal year.
  • Additionally, an advance tax is imposed on non-resident Indians (NRIs) and non-residents who generate any income in India during the year.

Q.4 How to pay advance tax?

Ans. The procedure is completely online. Follow the steps mentioned below to pay advance tax hassle free.

1. Login to the Indian Income Tax Department’s online filing portal.

2. Click the ‘e-Pay Tax’ button accessible in the ‘Quick Links’ area on the left side of the homepage. An additional choice is to use the search box to look up “e-Pay Tax.”

3. Enter your PAN on this page, then enter it again to be absolutely sure. After that, click “Continue” after inputting your mobile number.

4. Select “Continue” after inputting the 6-digit OTP that you have received on the device you were using.

5. After confirming your selection in the “Income Tax” box, click “Proceed.”

6. Tap ‘Continue’ after selecting ‘Assessment Year’ as 2024–25 and ‘Type of Payment’ as Advance Tax (100).

7. Fill all of the tax information.

8. Choose ‘Continue’ after selecting the bank and the payment format.

9. After verifying the challan details, choose “Pay Now.” If essential, you may also “Edit” these pieces of information.

10. The confirmation message will appear on the subsequent screen once the payment has been processed. On the right side of the challan, you’ll be able to see the BSR code and the serial number. For use in the future, make a copy of this tax receipt. In your tax return, you must provide the challan number and BSR code.

Advance tax late payment interest

Interest under 234B will be levied for failing to pay advance tax. Section 234B mandates you to pay advance tax by March 31st, at least 90% of the total amount of tax due. If taxes are not paid in advance, interest at the rate of one percent will be charged.

If advance tax is not submitted on time, interest will be imposed under 234C:

Particulars Rate of interest Period of interest Amount that is used to compute interest
If the advance tax paid is less than 15% by June 15th, 1% per month 3 months 15% of total tax less any taxes paid prior to the date of June 15
If the advance tax paid is less than 45% by September 15th,  1% per month 3 months 45% of the entire tax less any taxes paid up until September 15
If the advance tax paid by December 15th be less than 75%  1% per month 3 months 75% of the total tax less taxes that were paid up until December 15
If the amount of advance tax paid by March 15th does not exceed 100% 1% per month 1 month 100% of the total amount of tax less any taxes paid prior to March 15

Q.5 How to respond to Notice?

Ans. You can view the details of such significant transactions’ by login to the e-filing Portal (https://www.incometax.gov.in), go to “Pending Actions” tab and click on “Compliance Portal”. This will redirect you to Compliance Portal. On Compliance portal you need to respond to transactions by agree or disagree with transactions.

Conclusion: The e-campaign serves as a proactive approach by the Income Tax Department to ensure compliance with advance tax obligations. Taxpayers are encouraged to review their transactions, understand advance tax requirements, and utilize online payment methods to avoid late payment interest. Effective tax compliance contributes to a smoother functioning of the tax system and facilitates economic growth.

The Author is an Income tax, GST and Accounting Professional and can be contacted at 9024915488.

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