Tax Proj Sem5

7/17/2019 Tax Proj Sem5

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1

TAXATION LAW PROJECT

ADVANCE PAYMENT

OF TAXES:

AN OUTLINE SKETCH

Guided By: Submitted By:Mr. Raa Na!eet R"y S#a$i%Rat&"re'(a)u%ty: Ta* La#+, R"%% N". :

1-

Bat)& XIII

Seme+ter /

0ATE O( SBMISSION: 2345413

6I0A7ATLLA6 NATIONAL LAW NI/ERSIT78

PARWARA8 RAIPR



2

ACKNOWLEDGEMENTS

On the successful completion of my Taxation proect on the topic !A"#ance $ayment of

Taxes% An O#er#ie&'( ) &oul" li*e to express my sincere +ratitu"e to&ar"s my teacher Mr,

-ana Na#neet -oy( &ho +a#e me this uni.ue topic to &or* on, Without her a/le +ui"ance this

proect &oul" not ha#e /een possi/le for me to ma*e,

) &oul" also li*e to than* the li/rary an" )T section of our uni#ersity( for all the /oo*s(

articles( sites an" other material that ) o/taine" from them( failin+ &hich my research &oul"not ha#e /een possi/le,

) &oul" li*e to express my heartfelt +ratitu"e to my parents for their thorou+h support an"

concern, Also ) appreciate the #alua/le inputs an" su++estions of all my frien"s an" than*

them from the /ottom of my heart,

S&apnil -athore

Semester01

-oll No, 234



9

TA5LE O6 CONTENTS

S, No, Name $+, No,

2, )ntro"uction 7

8, -esearch Metho"olo+y

1

9, O/ecti#es 1

7, A"#ance Tax :n"er )ncome Tax Act( 2;32 3

1, Lia/ility To $ay A"#ance Tax ;

3, )nstallments Of A"#ance Tax An" Due Dates

Of $ayment

28

<, Conclusion 21

=, -eferences 23



)NT-OD:CT)ON

A"#ance taxation refers to payin+ a part of your yearly taxes in a"#ance, A"#ance tax is the

income tax paya/le if your tax lia/ility excee"s -s 24(444 in a financial year, A"#ance tax

shoul" /e pai" in the year in &hich the income is recei#e", >ence( it is also *no&n as the

?pay0as0you0earn? scheme,

A"#ance tax is applica/le &hen an in"i#i"ual has sources of income other than his@her salary,

6or instance( if one is earnin+ throu+h capital +ains( interest on in#estments( lottery( house

property or /usiness( the concept /ecomes rele#ant,

Any re/ate "ue fetches an interest of 4,1 per cent e#ery month( or( six per cent annually( as in

the case of an income tax refun", >o&e#er( if one "oesn?t pay the a"#ance tax on time( he?ll

/e char+e" one per cent e#ery month( or( 28 per cent a year,

)f a person is salarie"( he nee" not pay a"#ance tax as your employer "e"ucts tax at source

TDSB, >o&e#er( he still nee"s to file it if he has other sources of income( increasin+ his

lia/ility to more than -s 24(444, $rofessionals self0employe"B an" /usinessmen &ill ha#e to

pay taxes in a"#ance as( +i#en their /usiness income( the lia/ility can /e hu+e, The same +oes

for companies an" corporates,

A"#ance tax or self0assessment taxes ha#e to /e pai" on the 21th of Septem/er( Decem/er

an" March( in instalments of 94 per cent( 94 per cent an" 74 per cent( respecti#ely( for non0

corporates, Corporates nee" to pay it on the 21th of une( Septem/er( Decem/er an" March,

While employers "e"uct TDS on salaries( a"#ance tax is pai" on income that has not /een

su/ecte" to TDS,



3

-ESEA-C> MET>ODOLOG

This research is "escripti#e in nature, Secon"ary an" electronic resources ha#e /een use" to

+ather information an" "ata a/out the topic,

5oo*s an" other references as +ui"e" /y the faculty ha#e /een primarily helpful in +i#in+ the

proect a firm structure, We/sites an" articles ha#e also /een referre" to,

O5ECT)ES

• To examine the meanin+ an" nature of the term Fa"#ance tax in )n"ian context,

• To see ho& a"#ance tax is le#ie" for "ifferent tax0/earers( an" ho& it is calculate",



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C>A$TE- 2

ADVANCE TAX UNDER THE INCOME TAX ACT, 1961

ADANCE TAH is a scheme /y &hich the re#enue "epartment collects tax at re+ular inter#als as an" &hen income is earne", This scheme emphasiIes the premise that !Tax is

paya/le as an" &hen income is earne"',

Tax shall /e paya/le in a"#ance "urin+ any financial year( in accor"ance &ith sections 84= to

82;( in respect of the total income of an assessee &hich &oul" /e char+ea/le to tax, Such

income shall /e referre" to as !current income',2

Current income inclu"es income un"er all the fi#e hea"s of income, )t also inclu"es

a+ricultural income &hich is consi"ere" for rate purposes,

6or the purpose of computation of a"#ance tax( casual income an" capital +ains shall also /e

consi"ere" e#en thou+h it may not /e possi/le( at the /e+innin+ of the pre#ious year( for an

assessee to pre"ict such income streams accurately,

Sectionwise Overview of Av!nce T!"#

SECT)ON $A-T)C:LA-S

84< Lia/ility for payment of a"#ance tax

84= Con"itions of lia/ility to pay income0tax

84; Computation of a"#ance tax /y Assessee or Assessin+ Officer

824 $ayment of a"#ance tax

822 )nstalments of A"#ance Tax an" Due "ates for payment

897C $ro#iso $ayment of a"#ance0tax in case of capital +ains@casual income

Sec 2215 rea" &ith

Circular No 29@8442

A"#ance tax to /e pai" /y all companies

1 Se)ti" 2;: Ad!a)e ta* i+ $ayab%e " t&e i)"me "< t&e )urret year i)%udi= " t&e

i)"me "< )a$ita% =ai+ ad )a+ua% i)"me+.



;

Co$%&t!tion of Av!nce T!" '( t)e Assessee * Sec +9-1.-!./-.

Tax on Estimate" )ncome inclusi#e of surchar+e an" cessB

Less -elief u@s =;( ;4( ;4A an" ;2 Net Tax lia/ility

Less MAT Cre"it u@s 221AA an" AMT Cre"it u@s 221C( if any

Less TDS@TCS Total A"#ance Tax $aya/le

Co$%&t!tion of !v!nce t!" '( Assessin0 officer * Sec +9-1.-'. re! wit) Sec +9-+.

-!.# 0

6or the purpose of computin+ a"#ance tax paya/le u@s 8249B the Assessin+ officer shall

estimate the !current income' to /e the hi+her of the follo&in+ t&o%

J Total income of the latest pre#ious year assesse" un"er re+ular assessment or

J Total income returne" /y the assessee for any pre#ious year su/se.uent to the pre#ious year

for &hich re+ular assessment has /een ma"e,

Av!nce t!" i!'iit( on !n !0ent of ! non resient &/s 162#

A person shall /e re+ar"e" as an a+ent of a non resi"ent u@s 239 if an" only if an Assessin+

officer ser#es him a notice to such effect, 0 Till such notice is ser#e" an" the "ecision is

conclu"e" for each assessment year( the a+ent is not assessa/le at all,

There is no lia/ility on any a+ent to pay a"#ance tax merely /ecause he &as assesse" as an

a+ent in prece"in+ years,8

3!($ent of !v!nce t!" on c!%it! 0!ins

• Since it is not possi/le for the assessee to estimate his capital +ains( income from lotteries(

etc,( it has /een pro#i"e" that if any such income arises after the "ue "ate for any installment(

then( the entire amount of tax paya/le after consi"erin+ tax "e"ucte" at sourceB on such

capital +ains or casual income shoul" /e pai" in the remainin+ installments of a"#ance tax

&hich are "ue,

2 I)"me>ta* O?)er !+ TELCO @1- ;1 ITR 3; @SC.



5

• Where no such installment is "ue( the entire tax shoul" /e pai" /y 92st March of the

rele#ant financial year,

• No interest lia/ility &oul" arise if the entire tax lia/ility is so pai"

3en!t( for non4%!($ent

)n case of "efault in payment of a"#ance tax( 2 p, m, interest is pai" in a""ition to the tax

paya/le amount( un"er section%

• 8975 0 )f you ha#e not pai" the a"#ance tax i,e, ;4 of total tax paya/le /efore 92st

March,

• 897C 0 )f you ha#e not pai" the installment in time i,e 94 /efore 21th Sept( 34

/efore 21 Dec an" /alance /efore 21th March



C>A$TE- 8

5IAI5IT7 TO 3A7 ADVANCE TAX

)t is o/li+atory to pay a"#ance tax in e#ery case &here the a"#ance tax paya/le is -s, 24444

or more, Section 84= explains this pro#ision,9

An assessee &ho has opte" for the scheme of computin+ /usiness income un"er

section 77AD on presumpti#e /asis at the rate of = per cent of turno#er( shall /e

exempte" from payment of a"#ance tax relate" to such /usiness &ith effect from the

assessment year 8422028,

A senior citiIen resi"ent in"i#i"ual at least 34 years of a+e at any time "urin+ the

financial yearB not ha#in+ any income from /usiness@profession is not lia/le to paya"#ance tax from the financial year 8428029,

L)A5)L)T :NDE- D)66E-ENT S)T:AT)ONS

$ayment /y assessee of his o&n account%

:n"er Section 824( an assessee &ho is lia/le to pay a"#ance tax is re.uire" to estimate his

current income an" pay a"#ance tax thereon &ithout ha#in+ to su/mit any estimate or

statement of income to the assessin+ authorities,

After ma*in+ payment of first@secon" installment of a"#ance tax( assessee can re#ise the

remainin+ installments of a"#ance tax in accor"ance &ith his re#ise" estimate of current

income an" pay tax accor"in+ly( &ithout any re.uirement of filin+ the re#ise" estimate of

a"#ance" tax,

Computation of tax

Tax can /e compoun"e" on the current income estimate" /y the tax payerB at the rates in

force "urin+ the financial year, 6rom the tax so compute"( tax "e"ucte" or collecte" at source

&ill /e "e"ucte",

$ayment in pursuance of or"er of assessin+ officer%

The con"itions un"er this clause as +i#en in Section 824 are%

9 Se)ti" 25: Ad!a)e ta* i+ $ayab%e i< t&e i)"me ta* a<ter T0S i+ R+. 18"r m"re.



1

2, The tax0payer is one &ho ha" earlier /een assesse" to income0tax,

8, "espite the le+al o/li+ation( he has not pai" his a"#ance tax,

The assessin+ officer may pass an or"er un"er Section 8249B re.uirin+ him to pay a"#ance

tax on his current years income, The or"er must specify the "ifferent installments in &hich

income tax must /e pai", Such or"er may /e passe" "urin+ the pre#ious year /ut not later

than last "ay of 6e/ruary,

On receipt of notice from the Assessin+ Officer to pay tax( the assessee can su/mit his o&n

estimate of a lo&er current income@a"#ance tax an" pay tax accor"in+ly, )n such a case he has

to sen" intimation in 6orm no, 8=A to the assessin+ officer,

An estimate furnishe" /y the assessee in this form cannot /e reecte" /y "epartmental

authorities,7 >o&e#er( care must /e exercise" /y assessee in e#ery such case to file such

estimation in 6orm 8=A for any failure in this re+ar" &ill prompt the assessin+ officer to

ma*e le+ally permissi/le coerci#e reco#ery un"er the la&,

Alternati#ely( if the a"#ance tax on the current income as per o&n estimate of the assessee is

li*ely to /e hi+her than the amount estimate" /y the assessin+ officer( the assessee shall pay

hi+her tax in accor"ance &ith his o&n calculation, )n such cases( no intimation to theassessin+ officer is re.uire",

Computation of tax /y Assessin+ Officer

6irst of all( the AO &ill fin" out income of the current year, Current years income &oul" /e

calculate" on the follo&in+ /asis%

2, Total income of the latest pre#ious year in respect of ehich the assessee has /een assesse"

/y &ay of re+ular assessment,

8, The total income returne" /y the assessee for any su/se.uent year( &hiche#er is hi+her,

Tax lia/ility on the income of the current year &oul" /e calculate" accor"in+ to the rate

applica/le, Tax "e"ucte"@collecte" at the source &ill /e "e"ucte",

$ayment in pursuance of re#ise" or"er of Assessin+ Officer%

Puab Tra)t"r+ Ltd. ! CIT @2 Ta*ma 211 'Pu. Ad 6ar.,



11

The pro#isions are +i#en /elo&0

2, The or"er passe" /y the AO un"er section 8249B can /e re#ise" /y him un"er section

8247B,

8, Such re#ision is possi/le if su/se.uent to passin+ an or"er un"er section 8249B /ut /efore

March 2 of the rele#ant financial year( the assessee ha" furnishe" a return of income for a

later year or any assessment for a later year has /een complete" at a hi+her fi+ure,

9, On receipt of re#ise" or"er( the assessee &ill ha#e to pay a"#ance tax accor"in+ly,

The assessee can su/mit his o&n estimate of lo&er current income@a"#ance tax an" pay tax

accor"in+ly, )n such a case( he has to sen" intimation in 6orm no, 8=A to the assessin+

officer,

)f alternati#ely the a"#ance tax on current income as per o&n estimate is li*ely to /e hi+her

than the amount re0estimate" /y the assessin+ officer( the assessee shall pay hi+her tax in

accor"ance &ith his o&n calculation, )n such a case( intimation to the assessin+ officer is not

re.uire",

Computation of tax

The total income "eclare" in the return furnishe" /y the assessee for the later pre#ious year or

total income in respect of &hich the re+ular assessment is ma"e after passin+ an or"er /y the

assessin+ officer /ut /efore March 2( shall /e ta*en an" income tax thereon shall /e

calculate" at the rates in force in financial year, 6rom the tax so "etermine"( tax "e"ucte" or

collecte" at source &ill /e calculate",



12

C>A$TE- 9

INSTA55MENTS O8 ADVANCE TAX AND DUE DATES O8 3A7MENT

:n"er Section 822( the pro#isions are pro#i"e" re+ar"in+ last "ates of tax payments,

Av!nce T!" 4 Inivi&!s !n HU8s

• No a"#ance tax also &ritten shortly as A"#, TaxB is paya/le if the total tax lia/ility

after re"ucin+ the tax "e"ucte" at source is less than -s, 24(444@0,

• )f A"#ance Tax is not pai" in full for installments fallin+ "ue on 21th Septem/er an"

21th Decem/er( interest at the rate of 2 on the short amount for 9 months is to /e

pai",

• )f A"#ance Tax is not pai" in full for installments fallin+ "ue on 21th March( interest

at the rate of 2 on the short amount for 2 month is to /e pai", )f you "elay payment

of the last instalment in March /y e#en a "ay( you &ill ha#e to pay interest on the

entire instalment amount,

• Senior citiIens &ho "o not ha#e any income from /usiness @ profession are exempte"

from the payment of a"#ance tax &,e,f, 42@47@8428,

• )f you "o not pay a"#ance tax at all or if the a++re+ate pai" /y March 92 is less than

;4 per cent of the total tax paya/le( you &ill ha#e to pay an interest of 2 per cent per

month on the "eficit amount from April 2 of the follo&in+ year till the "ate you file

your return,

• The senior citiIens ha#e /een exempte" from payment of A"#ance Tax from

Assessment ear 8429027,

Av!nce T!" Inst!$ents D&e D!tes

D&e D!te A$o&nt of T!"

21th Septem/er At least 94 of Tax on total income for the year,

21th Decem/er At least 34 of Tax on total income for the year less a"#ance tax alrea"y



19

pai",

21th March 244 of Tax on total income for the year less a"#ance tax alrea"y pai",

Av!nce T!"# Non4Inivi&!s

• No a"#ance tax also &ritten shortly as A"#, TaxB is paya/le if the total income tax

lia/ility after re"ucin+ the tax "e"ucte" at source is less than -s, 24444@0,

• )f A"#ance Tax is not pai" in full for installments fallin+ "ue on 21th une for

Corporates onlyB( 21th Septem/er an" 21th Decem/er( interest at the rate of 2 on

the short amount for 9 months is to /e paya/le,

• )f A"#ance Tax is not pai" in full for installments fallin+ "ue on 21th March( interest

at the rate of 2 on the short amount for 2 month is to /e pai", )f the payment of the

last installment in March is "elaye" /y e#en a "ay( interest is to /e pai" on the entire

installment amount,

• )f you "o not pay a"#ance tax at all or if the a++re+ate pai" /y March 92 is less than

;4 per cent of the total tax paya/le( you &ill ha#e to pay an interest of 2 per cent per

month on the "eficit amount from April 2 of the follo&in+ year till the "ate you file

your return,

Av!nce T!" Inst!$ents D&e D!tes for 8ir$s, Co4o%er!tives !n 5oc! A&t)orities

D&e D!te A$o&nt of T!"

21th Septem/er At least 94 of Tax on total income for the year,

21th Decem/er At least 34 of Tax on total income for the year less a"#ance tax alrea"y

pai",


Av!nce T!" Inst!$ents D&e D!tes for Co$%!nies

D&e D!te Av!nce T!" Inst!$ent A$o&nt

21th une At least 21 of Tax on total income for the year,



1

21th Septem/er At least 71 of Tax on total income for the year less a"#ance tax alrea"y

pai",

21th Decem/er At least <1 of Tax on total income for the year less a"#ance tax alrea"y

pai",


)f the last "ay for payment of any installment of a"#ance tax is a "ay on &hich the recei#in+

/an* is close"( the assessee can ma*e the payment on the next imme"iately follo&in+

&or*in+ "ay( an" in such cases( the man"atory interest le#ia/le un"er sections 8975 an"

897C &oul" not /e char+e",



13

CONCL:S)ON

Taxpayers are re.uire" to pay tax "urin+ the year on the /asis of their o&n computation of

income, The a"#ance tax is paya/le on total income of the year from all sources i,e, salary(

/usiness( profession etc, inclu"in+ capital +ain( interest( rental income or lottery@priIe

moneyB,

The a"#ance tax is paya/le if it excee"s -s,24(444 for the year,

)n the case of an in"i#i"ual( a"#ance tax nee"s to /e "eposite" in a manner "ifferent from

companies an" firms, >o&e#er( non0payment incurs penalties in /oth the cases,



1-

-E6E-ENCES

5OOKS

•Sin+hania( ino"( Direct Taxes: Law and Practice( Taxmann( 12

st

E"ition( 8427,

WE5L)OG-A$>

• incometaxin"ia,+o#,in

• http%@@&&&,"#sca,net@

• &&&,tin0ns"l,com

• &&&,simpletaxin"ia,net

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