Advance Tax - Taxation | Income Tax for assessment (Inter Level) PDF Download

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

Section 211. Time limit for Payment of Advance Tax

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

Default by assessee covered u/s 44AD

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.

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

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.