Advance Tax - Taxation Notes | Study Income Tax for assessment year 2017-18 (Inter Level) - Taxation

Taxation: Advance Tax - Taxation Notes | Study Income Tax for assessment year 2017-18 (Inter Level) - Taxation

The document Advance Tax - Taxation Notes | Study Income Tax for assessment year 2017-18 (Inter Level) - Taxation is a part of the Taxation Course Income Tax for assessment year 2017-18 (Inter Level).
All you need of Taxation at this link: Taxation

Section 207. Liability for Payment of Advance Tax
Tax shall be payable in advance during any financial year in respect of total income which is chargeable to tax in the assessment year. Advance tax is payable on all incomes whether special income, casual income or normal income whether these incomes can be estimated or not. However following income cannot be estimated therefore advance tax is payable as and when it arises.
1. Capital Gain
2. Casual Income
3. Profit from business if it arises for the first time during the financial year.

Section 208. When Does Liability to Pay Advance Tax Arise
Every person is liable to pay advance tax if his tax payable after deducting TDS during a financial year is Rs. 10,000 or more.
Exception : In following case even if tax payable is atleast Rs. 10,000 advance tax is not payable.
1. Individual who is Resident in India and whose age is atleast 60 years at any time during the previous year and who does not have any business income.

Section 209. Computation of Advance Tax

Estimate gross total income 10,00,000
Less: Estimated deduction u/s 80C to 80U (1,00,000)
Estimated total income 9,00,000
Tax on the estimated total income (Rebate u/s 87A is available if applicable) 2,00,000
Add: Surcharge if applicable (assume 5%) 10,000
Tax and surcharge 2,10,000
Add: Education cess @ 3% 6,300
Tax liability 2,16,300
Less: Relief u/s 89 nil
Tax 2,16,300
Less: Tax deducted at source and collected at source 2,06,300
Advance tax payable 10,000

 

Section 211. Time limit for Payment of Advance Tax

  All Assessee 44AD
• By 15th June 15% Nil
• By 15th September 45% Nil
• By 15th December 75% Nil
• By 15th March 100% 100%

 

Note 1 : Any amount paid by way of advance tax on or before the 31st day of March shall also be treated as advance tax paid during the financial year. (Interest u/s 234B shall not be payable).
Note 2 : Section 210. Can make adjustment of tax: A person who pays any installment or installments of advance tax may increase or reduce the amount of advance tax payable in the remaining installment(s) to accord with his estimate of his current income and the advance tax payable thereon, and make payment of the said amountin the remaining installment(s) accordingly.
Note 3 : Section 210. Assessing officer can force the assessee to pay advance tax.
Note 4 : Interest u/s 234C is payable if there is deferment in payment of advance tax.

Section 234C. Interest for Deferment of Advance Tax
Default by assessee other than assessee covered u/s 44AD

Due date Advance tax paid is Interest
15-6 Less than 15%* of tax on returned income.
* If advance tax paid is atleast 12% of tax on returned income
then no interest shall be computed.
1% p.m. of shortfall x 3
15-9 Less than 45%* of tax on returned income.
* If advance tax paid is atleast 36% of tax on returned income
then no interest shall be computed.
1% p.m. of shortfall x 3
15-12 Less than 75% of tax on returned income 1% p.m. of shortfall x 3
15-3 Less than 100% of tax on returned income 1% p.m. of shortfall x 1

Default by assessee covered u/s 44AD

Due date Advance tax paid Interest
15-3 Less than 100% of tax on returned income 1% p.m. of shortfall x 1

Note : Where the business is being started for the first time and advance tax is paid in the remaining installments after the date of setting up of the business then interest u/s 234C shall be nil.

P1 (Page 17.2) : X Ltd. furnishes following particulars of its estimated income You are required to compute advance tax and interest payable u/s 234C from the following information.

Business profit 1,00,000
LTCG arise on transfer of gold on 10-9 2,00,000
Payment of advance tax on 10-6 : Rs. 4,000; on 10-9 : Rs. 5,000; on 10-12 Rs. 10,000; on 10-3 Rs. 20,000

Solution
Computation of tax
Tax on Business income @ 30.9% on Rs. 1,00,000        -  30,900
Tax on LTCG @ 20.6% on Rs. 2,00,000 (income arising on 10-9)  -  41,200
Total Tax

Due
Date
Advance Tax (a) Installment due (b) Advance tax paid (c) Shortfall
(a) – (c)
Interest u/s
234C
15-6 15% of 30,900 = 4,635
* 12% of 30,900 = 3,708
4,635 4,000*
(see note 1)
635 1% of 0 x 3
= Nil
15-9 45% of 72,100 = 32,445
**36% of 72,100 = 25,956
27,810 9,000**
(see note 2)
23,445 1% of 23,400
x 3 = 702
15-12 75% of 72,100 = 54,075 21,630 19,000 37,075 1% of 35,000
x 3 = 1,050
15-3 100% of 72,100 = 72,100 18,025 39,000 33,000 1% of 33,100
x 1 = 331

Note 1 : If advance tax paid is atleast 12% then no interest is payable for the first quarter. In this case advance tax due is Rs. 3,708 and payment of advance tax is Rs. 4,000 therefore no interest.
Note 2 : If advance tax paid is atleast 36% then no interest is payable for the second quarter. In this case advance tax due is Rs. 25,956 and payment of advance tax is Rs. 9,000 therefore interest u/s 234C is payable.
Note 3 : Shortfall amount shall always be rounded off downwards to 100.

The document Advance Tax - Taxation Notes | Study Income Tax for assessment year 2017-18 (Inter Level) - Taxation is a part of the Taxation Course Income Tax for assessment year 2017-18 (Inter Level).
All you need of Taxation at this link: Taxation

Download free EduRev App

Track your progress, build streaks, highlight & save important lessons and more!

Related Searches

Extra Questions

,

pdf

,

Important questions

,

Objective type Questions

,

mock tests for examination

,

video lectures

,

MCQs

,

Exam

,

practice quizzes

,

study material

,

Viva Questions

,

Free

,

shortcuts and tricks

,

past year papers

,

Advance Tax - Taxation Notes | Study Income Tax for assessment year 2017-18 (Inter Level) - Taxation

,

Summary

,

Previous Year Questions with Solutions

,

Advance Tax - Taxation Notes | Study Income Tax for assessment year 2017-18 (Inter Level) - Taxation

,

Semester Notes

,

Advance Tax - Taxation Notes | Study Income Tax for assessment year 2017-18 (Inter Level) - Taxation

,

Sample Paper

,

ppt

;