Advance Tax Liability for the A.Y. 2017-18

Advance Tax provisions has been amended by the Finance Act 2016 (No. 28 of 2016) which is effective from 01-06-2016 for Assessment Year 2017-18. Following are major amendments related to Advance Tax Liability for A. Y. 2017-18:

(a)  Section 211(1) is amended to provide that advance tax will be paid in four installments of 15%, 45%, 75% and 100% of tax payable on the current income by 15th June, 15th September, 15th December and 15th March, respectively in case of all assesses. Earlier upto AY 2016-17 the assessee other than corporate assessee paid Advance Tax in three Installment. Now all assessee except assessee covered u/s 44AD is treated at par for Advance Tax provisions.

(b)  Assessees covered u/s 44AD are to pay advance tax of the whole amount in one instalment on or before the 15th March of the financial year consequent upon raising of the turnover limit from Rs.1 crore to Rs. 2 crore.

Based on above amendments the advance tax related provision under income tax law is as under:

Advance tax (Section 208, 209 & 211)

Advance tax is payable on all income during the financial year in every case where the amount of such tax payable by an assessee during that year is Rs. 10,000 or more. Following is chart showing Advance Tax Liability for the A.Y. 2017-18:

Advance Tax Liability for All Assessee (other than covered under section 44AD of the I.T. Act 1961)

Due Date Installment Payable
 On or before 15th Jun, 2016  Not less than 15% of advance tax.
 On or before 15th  Sep, 2016  Not less than 45% of advance tax as reduced by the amount paid in the earlier installment.
 On or before 15Th Dec, 2016  Not less than 75% of advance tax as reduced by the amount paid in the earlier installments.
 On or before 15Th Mar, 2017  The whole amount (100%) of advance tax as reduced by the amount paid in the earlier installments.

Advance Tax Liability for Assessee covered under section 44AD of the I.T. Act 1961

Due Date Installment Payable
On or before 15th Jun, 2016
On or before 15th  Sep, 2016
On or before 15Th Dec, 2016
On or before 15Th Mar, 2017  The whole amount (100%) of advance tax as reduced by the amount paid in the earlier installments.
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Note:

  1. Resident individuals who are over 60 years of age and do not have income chargeable under the head ‘Profits and Gains of Business or Profession’ are not required to pay advance tax.
  2. Any amount paid by way of advance tax on or before 31st March shall also be treated as advance tax paid during financial year ending on that day
  3. Deduction under Chapter VIA are allowable while computing liability of advance tax.
  4. TDS is to be reduced from total tax liability of assessee and then specified percentage be calculated of advance tax.

Frequently Asked Questions on Advance Tax

What is the Advance Tax and why it is paid in Advance?

Tax is a major source of fund for any Government in the world. In India as per general provision of the Income Tax Act, 1961 every person whose income is exceeds threshold exemption limit is liable to pay income tax. However for speedy and efficient tax collection a mechanism is developed by government in the form Advance Tax. Advance tax is a payment mechanism in which tax is deposited by assessee in installment instead of entire amount deposited at the end of financial year. For assessee’s point of view advance tax is helpful for fund management as the tax liability is divided in installments.

What is meant by self-assessment tax?

Self Assessment tax means any balance tax paid by the assessee on the assessed income after taking TDS and Advance tax into account before filing the Return of income.

What are the Statutory Provisions for payment of Advance Tax in India?

Following are the sections of the Income Tax Act, 1961 which deal with the provisions of advance tax:

  • Section 208: Conditions of liability to pay advance tax
  • Section 209: Computation of advance tax
  • Section 210: Payment of advance tax by the assessee of his own accord or in pursuance of order of Assessing Officer.
  • Section 211: Installments of advance tax and due dates.

 

When Advance tax is payable? / Who is liable to pay Advance Tax in India?

As per section 208, advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee is ten thousand rupees or more. Thus provision of advance tax is applicable on all assessee whose tax liability comes more than Rs.10,000/-. However in case following case advance tax need not be deposited :

1) where entire tax liability is covered by TDS deducted then in this situation advance tax is not applicable.

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2) Resident individuals who are over 60 years of age and do not have income chargeable under the head ‘Profits and Gains of Business or Profession’ are not required to pay advance tax. Further assessees covered under section 44AD of the Act can deposit his liability of entire advance tax upto 15th March 2017.

 

What are the due dates and amount of advance tax payment paid in India?

Type of Assessee

By 15th June 2016 By 15th Sept 2016 15th Dec 2016 15th March 2017
All Assessee except covered u/s 44AD

15%

45% 75%

100%

Assessee Covered u/s 44AD

100%

Note: Any tax paid till 31st March 2017 is treated as advance tax.

 

Whether a Non-Resident Indian (NRI) or a Non Resident is required to pay Advance Tax in India?

Yes. The advance tax is applicable on both Non-Resident Indian (NRI) or a Non Resident if they have any income accrue during the year in india.

 

How can I pay income tax? / What are the mode of payment of Advance Tax?

Advance Tax can be deposited through cash, cheque and electronic mode (Debit Card/Credit Card). The challan specified for advance tax is ITNS 280. All designated branches of banks empanelled with the Income Tax Department are accepted the advance tax. Assessee can pay Advance Tax Online through TIN-NSDL website.

 

What are the penal consequences in case of failure to deposit Advance Tax within prescribed time?

If advance tax is not paid or the amount of advance tax paid is less than 90% of the assessed tax, the assessee shall be liable to pay simple interest @1% p.m. u/s 234B from 1st day of assessment year upto date of deposit tax & interest. Further u/s 234C if the payment of advance tax is deferred beyond the due dates, interest @1% p.m., for a period of 3 months, will be payable for every deferment, except for the last installment of 15th March where it will be 1% for one month.

 

How can assessee verify the status of his tax deposition and other tax credit?

Due care should be taken with respect to PAN, Assessment Year and tax Code before depsoiting advance tax. The assessee may verify status his Advance Tax deposited through following links :

  1. Form No.26 AS: The credit of tax depsoited would be reflected in Form 26AS within one week of making the payment.
  2. NSDL e-Governance: Challan Status Inquiry can be made through OLTAS Application (NSDL) by visiting https://tin.tin.nsdl.com/oltas/index.html.
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Can Income tax department issue notice to assessee for payment of Advance Tax ?

Yes. Assessing Officer may pass an order u/s 210(3) of the Income Tax Act 1961 or amended order u/s 210(4) and issue a notice of demand u/s 156 requiring assessee to pay advance tax.

 

Whether agricultural income would be included in total income for computing advance tax ?

Yes. Net agriculture income to be taken into account for computing advance tax in terms of section 209(2) of Income Tax Act, 1961.

 

How to Compute Advance Tax Liability ?

The Computation of Tax Liability for the determine Advance Tax is given in below table:

Particulars

Amount

Income from salary (Net)

XXXXX

Income from house property (Net)

XXXXX

Profits and gains of business or profession(Net)

XXXXX

Capital gains(Net)

XXXXX

Income from other sources(Net)

XXXXX

Gross Total Income

XXXXX

Less : Deductions under Chapter VI-A (u/s 80C to 80U))

(XXXXX)

Total Income (i.e., taxable income)

XXXXX

Tax

on total income at applicable rates

XXXXX

Less : Rebate under section 87A

(XXXXX)

Tax Liability After Rebate

XXXXX

Add: Surcharge

XXXXX

Tax Liability After Surcharge

XXXXX

Add: Education cess @ 2% on tax liability after surcharge

XXXXX

Add: Secondary and higher education cess @ 1% on tax liability after surcharge

XXXXX

Tax liability for the year

XXXXX

Less:  TDS

(XXXXX)

Tax payable

XXXXX

Advance Tax

(Above Tax) x (specified percentage u/s 211)

 

Download challan of Advance Tax/Self Assessment Tax


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