Udit Rana

Udit RanaAdvance Payment due date is approaching fast as due date for September Quarter for Payment of advance tax is 15th September 2015, so I thought it appropriate to discuss provisions related to payment of advance tax and consequences of late payment, Short Payment or non payment of advance tax. The article discusses about to whom the provision is applicable , due date, quantum of advance tax payable and how Interest is calculated in case of non payment or Short Payment of advance taxes.

Advance Payment of Income Tax

As per Section 207, every person should pay Income Tax in advance but as per Section 208, advance tax is exempt if tax payment during a particular year is less Rs 10000 .

As per Section 211, advance tax is to be paid in the manner given below :

a) When assesseee is Company .

Upto 15th June of Previous Year 15%    of tax payable
Upto 15th September of Previous Year 45%    of tax payable
Upto 15th December of Previous Year 75%    of tax payable
Upto 15th March of Previous Year 100%  of tax payable
  1. b) When assesseee is person other than a Company .
Upto 15th September of Previous Year 30%    of tax payable
Upto 15th December of Previous Year 60%    of tax payable
Upto 15th March of Previous Year 100%  of tax payable

If any assesseee has defaulted in payment of advance tax then Interest shall be charged  u/s 234C @ 1% per month for a period of 3 months on the amount of default in each installment but in the last installment Interest shall be charged for one month only.

Any amount of Income tax paid upto 31st March of previous year is called Advance tax and any tax paid after 31st March is called Self-assessment tax .

If advance tax paid is less than 90% of tax payable then assessee shall be required to pay Interest u/s 234B also @1% per month or part of a month for the period starting from 1st April of Assessment Year upto the date of payment .

If any assessee has paid Income tax after the last date of filing of Return of Income in that  case, Interest shall be charged u/s 234A also @1% per month or part of a month for the period beyond the last date of filing of return of Income.

If any assessee has paid Income tax in excess it will be refunded with interest @0.5% or part of a month for the period starting from 1st day of AY upto the date of granting refund but if refund is less than 10% of tax liability, no Interest is payable .

Q1. ABC Ltd. Has estimated its tax payable to be Rs 12,00,000 for PY 2012-13 and paid advance tax accordingly but actual tax liability was found to be Rs 20,00,000 and the Company paid the balance amount on 10/12/2013.

Compute Interest payable u/s 234A/234B/234C  ?

Solution:            PY 2012-13, AY 2013-14
Due Date
Tax on Estimated Liab.
Tax on Actual Liab.
Deficiency
Interest u/s 234C
15th of June
180000
300000
120000
120000*1%*3=3600
15th of September
540000
900000
360000
360000*1%*3=10800
15th of December
900000
1500000
600000
600000*1%*3=18000
15th of March
1200000
2000000
800000
800000*1%*1=8000
Total
Rs 40,400

Interest u/s 234B ( from 1st April of AY upto DOP)

 = 8,00,000*1%*9 months = Rs 72,000

Interest u/s 234A (from due date of return upto DOP)

 = 8,00,000*1%*3 months = Rs 24,000

As per Section 234C, if any Company has paid advance tax at least 12% of actual tax liability upto 15th June of PY then no Interest shall be charged u/s 234C for such installment .

Similarly if the company has paid advance tax at least 36% of actual tax liability upto 15th September of PY then no Interest shall be charged u/s 234C for such installment .

Q2. ABC Ltd. Has estimated its tax payable to be Rs 9,00,000 and paid advance tax accordingly but actual tax liability was found to be Rs 9,50,000 and balance amount was paid by the Company on 10/12/2013.

Compute Interest payable u/s 234A/234B/234C  ?

Solution:        PY 2012-13, AY 2013-14
Due Date
Tax on Estimated Liab.
Tax on Actual Liab.
Deficiency
Rate of Tax on
Actual Liab.
Interest
u/s 234C
15th of June
135000
142500
7500
135000/950000*100=14.2%
0
15th of September
405000
427500
22500
405000/950000*100=42.6%
0
15th of December
675000
712500
37500
37500*1%*3=1125
15th of March
900000
950000
50000
50000*1%*1=500
Total
=Rs 1,625

Interest u/s 234B = 0   because  Company has paid advance tax more than 90% of tax payable i.e., 900000/950000*100= 94.7%

Interest u/s 234A = 50000*1%*3= Rs 1,500

(Author can be reached at udit.rana16121994@gmail.com)

More Under Income Tax

Posted Under

Category : Income Tax (27605)
Type : Articles (17244)

0 responses to “All about Advance Payment of Income Tax”

  1. Udit Rana says:

    Yes you are right Mr. Mukeah but exemption is available only in case senior citizen don’t have any business income.
    This benefit was introduced in Finance Act,2012 [Clause 80] and is applicable from 01.04.2012

  2. Udit Rana says:

    Yes you are right Mr. Rajkumar but exemption is available only in case senior citizen don’t have any business income.
    This benefit was introduced in Finance Act,2012 [Clause 80] and is applicable from 01.04.2012

  3. VIJENDRA KUMAR says:

    i am a pensioner & draw my pension from a bank which also holds my Fixed deposits. I have no other income. As I am not giving Form 15 G or H, the bank deducts TDS from my pension & Interests on FDs. Now who is responsible to pay Interest on account of non-fulfillment of percentages of tax paid by Sep, Dec and Mar ? Me or bank and why ?
    I have noted that the bank deducts about 60% of income tax due by March and the balance 40% is deposited by me as Self-assessment Tax, after I get Form 26AS, Form 16 & Form 16A, which is somewhere during end of June. Now who should bear the interest for the delay caused by my bank in giving Form 16 & 16A and delays in depositing my deducted tax with the govt thereby delaying generation of Firm 26AS till end of June ? I see no reason for me to bear the penal interest for delayed actions by my bank. Kindly clarify.

  4. VIJENDRA KUMAR says:

    i am a pensioner & draw my pension from a bank which also holds my Fixed deposits. I have no other income. As I am not giving Form 15 G or H, the bank deducts TDS from my pension & Interests on FDs. Now who is responsible to pay Interest on account of non-fulfillment of percentages of tax paid by Sep, Dec and Mar ? Me or bank and why ?

    I have noted that the bank deducts about 60% of income tax due by March and the balance 40% is deposited by me after I get Form 26AS, Form 16 & Form 16A, which is somewhere during en

  5. Rajkumar says:

    Why have you left out Senior Citizens ?? They are not supposed to pay Advance Tax !

Leave a Reply

Your email address will not be published. Required fields are marked *