Budget 2017-Rationalisation of section 211 and section 234C relating to advance tax
Section 211 of the Act provides for instalments of advance tax and due dates for depositing the same. Clause (b) of sub-section (1) of the said section provides that an eligible assessee engaged in an eligible business referred to in section 44AD is liable to pay advance tax in a single instalment on or before the 15th of March every financial year.
Vide Finance Act 2016, presumptive taxation regime has been extended to professionals also. Hence, it is proposed to amend the said clause (b) to provide that the assessee who declares profits and gains in accordance with presumptive taxation regime provided under section 44ADA shall also be liable to pay advance tax in one instalment on or before the 15th of March.
It is also proposed to make consequential amendments in sub-section (1) of section 234C to provide that in respect of an assessee referred to in section 44ADA, interest under the said section shall be levied, if the advance tax paid on or before the 15th March, is less than the tax due on the returned income.
Vide Finance Act, 2016, tax on certain dividends received from domestic companies is to be levied under section 115BBDA of the Act with effect from the 1st April, 2017, if such income exceeds ten lakh rupees. However, in view of the uncertain nature of declaration and receipt of dividend incomes, an assessee liable to pay advance tax may not be able to correctly determine such liability within the payment schedule as specified under section 211 and shall, therefore, incur levy of interest on deferment of advance tax as specified under clauses (a) or (b) of section 234C(1).
It is hence proposed to provide that that if shortfall in payment of advance tax is on account of under-estimation or failure in estimation of income of the nature referred to in section 115BBDA, the interest under section 234C shall not be levied subject to fulfilment of conditions specified therein.
These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent years.
[Clauses 73 & 74]
Extract of relevant clause from Finance Bill, 2017
Amendment of section 211.
73. In section 211 of the Income-tax Act, in sub-section (1), in clause (b), for the words, figures and letters “an eligible assessee in respect of an eligible business referred to in section 44AD”, the words, brackets, figures and letters “an assessee who declares profits and gains in accordance with the provisions of sub-section (1) of section 44AD or sub-section (1) of section 44ADA, as the case may be” shall be substituted.
Amendment of section 234C.
74. In section 234C of the Income-tax Act, in sub-section (1),—
(i) in clause (a), for the words, figures and letters “an eligible assessee in respect of the eligible business referred to in section 44AD”, the words, brackets and letter “the assessee referred to in clause (b)” shall be substituted;
(ii) in clause (b), for the words, figures and letters “an eligible assessee in respect of the eligible business referred to in section 44AD”, the words, brackets, figures and letters “an assessee who declares profits and gains in accordance with the provisions of sub-section (1) of section 44AD or sub-section (1) of section 44ADA, as the case may be” shall be substituted;
(iii) in the first proviso,—
(A) in clause (c), for the words “first time,” occurring at the end, the words “first time; or” shall be substituted;
(B) after clause (c) and before the long line, the following clause shall be inserted, namely:—
“(d) income of the nature referred to in sub-section (1) of section 115BBDA,”;
(C) in the long line, after the words, brackets and letter “or clause (c)”, the words, brackets and letter “or clause (d)” shall be inserted.
