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Advance Income Tax – Financial year 2016-17 is on the brink of the completion, let’s discussed on it.

Q.1. What is Advance Income Tax?
Ans. Advance tax is a payment tool in which tax is deposited by assessee in installment instead of lump sum amount deposited at the end of financial year. It is For assessee’s conveyance that for fund management as the tax liability is divided in installments. Government is also benefited with this speedy and easy tax collection system.As per Income tax rule it is mandatory to pay advance tax if the income tax is payable Rs. 10000 or more during financial year, applicable to all type of assessee.

Q.2. When Advance Tax is payable?
Ans. Advance tax installments have been made same for both individuals and corporate i.e. by 15th June pay 15%, by 15th September pay 45%, by 15th December pay 75% and by 15th March, 100% of taxes must be paid.

Q.3. Who is liable to pay Advance Tax?
Ans. 1. If you are a salaried class– TDS deduction by your employer takes care of a large part of your taxes and usually you don’t have to pay advance tax separately. But if you have income from other sources like rental income or capital gains from shares or selling assets, or large interest income which can raise your total tax outgo; you must pay advance tax.
2. If you are a professional or business class – You must have to estimate your total income and calculate after considering TDS deducted by your client and pay taxes on it as per advance tax installments.

Q.4 Whether a NRI is liable to pay Advance Tax?
Ans. Yes, NRI if they have any income accrue during the year in India.

Q.5. Is there exemption in Advance tax payment?
Ans.  1. Senior citizens, those who are 60 years or older and do not have income from business, are exempt from   paying advance tax.
2.Assessee covered under section 44AD – Presumptive scheme of income tax are exempt from advance tax   payment (100% Last installment).

Q.6. Whether deduction under Chapter VIA are eligible while computing income tax liability for advance tax?
Ans. Yes

Q.7. What are the consequences if Advance Tax is not paid or short paid ?
Ans. a. Interest under section 234B – If you liable to pay advance tax and had not paid or you paid advance tax but advance tax paid is less than 90% of assessed tax. Then the assessee shall be liable to pay simple interest @1% p.m. u/s 234B from 1st day of assessment year up to date of deposit tax & interest.
b. Interest under section 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.

Q.8. What happen if you missed deadline of last installment of Advance Tax payment (i.e.15th March)?
Ans. There is nothing to worry as per rule 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.

Q.9 How to make advance tax payment?
Ans. Advance Tax can be deposited through cash, cheque and electronic mode (Debit Card/Credit Card/Online Banking). The challan specified for advance tax is ITNS 280.

 

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