Rationalisation of advance tax payment schedule under section 211 and charging of interest under section 234C
Budget 2016: As per the existing provisions of sub-section (1) of section 211, the advance tax payment schedule for a company is fifteen per cent, forty-five per cent, seventy-five per cent and hundred per cent of tax payable on the current income to be paid by 15th June, 15th September, 15th December and 15th March respectively. For other assessees, the advance tax payment schedule is thirty per cent, sixty per cent and hundred per cent of tax payable on current income to be paid by 15th September, 15th December and 15th March respectively.
Based on the recommendations of Expenditure Management Commission clubbed with the fact that most of the advance tax is now paid electronically it is proposed to rationalise schedule for advance tax payment and prescribe the same advance tax schedule for all assessees other than an eligible assessee in respect of eligible business as referred to in section 44AD. The modification in payment schedule will facilitate forecasting of revenue collections during a financial year with greater accuracy.
It is further proposed that an eligible assessee in respect of eligible business referred to in section 44AD opting for computation of profits or gains of business on presumptive basis, shall be required to pay advance tax of the whole amount in one instalment on or before the 15th March of the financial year.
Consequential amendments are also proposed to be made to section 234C which provides for chargeability of interest for deferment of advance tax to bring it in sync with the amendments proposed in section 211.
It is also proposed that interest under section 234C shall not be chargeable in case of an assessee having income under the head “Profits and gains of business or profession” for the first time, subject to fulfillment of conditions specified therein.
These amendments will take effect from 1st day of June, 2016.
TABLE SHOWING CHANGES IN ADVANCE TAX
Changes in Advance Tax Payment Due dates for All assesse **
| Instalment | Due Date | Rate |
| 1st | 15th June | 15% |
| 2nd | 15th September | 45% |
| 3rd | 15th December | 75% |
| 4th | 15th March | 100% |
** Except for Individuals opted Sec.44AD (Presumptive Income) – Due Date is 15th March.
Clause 87 of Finance Bill 2016
Clause 87 of the Bill seeks to amend section 211 of the Income-tax Act relating to instalments of advance tax and due dates.
As per the existing provisions of sub-section (1) of the aforesaid section, the advance tax payment schedule for a company is fifteen per cent., forty-five per cent., seventy-five per cent. and hundred per cent. of tax payable on the current income by 15th June, 15th September, 15th December and 15th March, respectively. For assessees (other than companies), the advance tax payment schedule is thirty per cent., sixty per cent. and hundred per cent. of tax payable on current income by 15th September, 15th December and 15th March, respectively.
It is proposed to amend the advance tax payment schedule for assessees (other than companies) and bring it in consonance with the existing advance tax payment schedule applicable for a company.
It is further proposed that an eligible assessee in respect of eligible business referred to in section 44AD opting for computation of profits or gains of business on presumptive basis, shall be required to pay advance tax of the whole amount in one instalment on or before the 15th March of the financial year.
These amendments will take effect from 1st June, 2016.
Clause 89 of Finance Bill 2016
Clause 89 seeks to amend section 234C of the Income-tax Act relating to interest for deferment of advance tax.
It is proposed to make consequential amendments in sub-section (1) of section 234C, in view of the amendments made in section 211, so as to levy interest on deferment of advance tax, in the same manner as applicable to the company, to an assessee (other
than company) also. Further, with regard to an eligible assessee referred to in section 44AD, it is proposed to provide that interest shall be levied, if the advance tax paid on or before the 15th day of March is less than the tax due on the returned income.
It is also proposed to amend the said section so as to provide that nothing contained in the said sub-section (1) shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of under-estimate or failure to estimate income under the head “Profits and gains of business or profession” in cases where the income accrues or arises under the said head for the first time.
These amendments will take effect from 1st June, 2016.
[Clause 87 & 89]
