Payment of Advance Tax: All you need to know

As per Section 208 of t​he Income Tax Act,
Every person (individual, firm, company, etc.)
whose estimated tax liability for the year (i.e., for the year in progress such as FY 2016-17, FY 2017-18,  etc.)
after TDS (i.e., TDS which is deducted for the person by its payers/clients/banks, etc.)
Is Rs. 10,000 or more
shall pay its tax for the year in advance during the same financial year
Such tax shall be paid in instalments
Individuals, having only salary income are not required to pay advance tax as the liability to deduct and deposit tax is on the employer making such payment in the form of TDS​

​​An assessee can revise the estimation of income and pay the taxes accordingly without any requirement of filing the estimation of income with the department.​

​In case the assesee wants to revise the estimate of income after making payment of first/ second instalment of advance tax, the assesse can revise the remaining instalment of advance tax in accordance with his revised es​timate of current income and pay the advance tax accordingly.​

Where advance tax is payable due to the notice of demand issued by Assessing Officer then whole or part of the advance tax is payable in the remaining instalments, i.e., instalments due during the financial year after the date of notice.

A resident senior citizen (i.e., an individual of the age of 60 years or above during the financial year) not having any income from business or profession is not liable to pay advance tax.
Taxpayer who opted for presumptive taxation scheme of section 44AD or section 44ADA is liable to pay 100% of advance tax by 15th March.

Advance Tax is not an expense.
It is considered as an asset and adjusted against one’s tax liabilities at the time of finalization of the Balance Sheet.
It is a charge on income and not considered as an expenditure.
It is shown under Loans and Advances in the Balance Sheet.​

​Showing the total tax liability as Income tax, Education cess, Surcharge, etc., is advisable.
However, in the event the bifurcation of tax payment like, income-tax, surcharge, Cess, etc., is not done due to any reason, there is no need to panic.
While filing the income-tax return just mention the total amount. in income-tax column and that would be  sufficient. However, at the time of filing income-tax return, you should fill up the correct bifurcation details and then CPC will check it properly at the time of processing.​

​​​Once the Advance Tax is paid, it will be reflected on assessee’s Form 26AS within 3-4 working days of making the payment.
The banks upload challan details to TIN in 3 working days after the realization of the tax payment online.
After the bank uploads the details of self -assessment/advance tax to TIN, it is automatically posted into assessee’s Form 26AS.

​While making payment of tax, apart from other things, one should clearly mention following details :
i) Head of payment, i.e., Corporation Tax/Income-tax (other than companies)
ii) Amount and mode of payment of tax
iii) Type of payment [i.e., Advance tax/Self-assessment tax/Tax on regular assessment/Tax on Dividend/Tax on distributed Income to Unit holders/Surtax]
 iv) Assessment year – this is a general error that assessees commit as AY is different from Financial year
v) The unique identification number called as PAN [Permanent Account Number] allotted by the IT Department.
vi) The details are displayed on screen and should be confirmed before proceeding with payments.

Advance tax is payable on total income which includes capital gains and casual income (i.e., income from lotteries, crossword puzzles, etc.).
However, it is practically not possible to estimate the income from capital gain and casual income in advance. Therefore, in such cases it is provided that if any such income arises after the due date of any instalment, then the tax calculated on capital gain and casual income shall be paid in remaining instalments of advance tax which are due.
If the entire amount of tax is so paid then no interest for late payment is levied.

​​For the purpose of advance tax, an assesse will be considered as assesse-in-default if he:-
does not pay the advance tax on receiving the order from Income-tax officer as per the due dates, or
does not file an intimation in Form 28A before the instalment due date.

Any taxes paid till 31^st March will be treated as advance tax.
If the last day for the payment of advance tax is the day on which the banks are closed, then one should pay the advance tax on the immediately following working day and no interest shall be charged on such payments of advance tax.

​​​​​​As per section 208 of the income-tax Act, 1961, every person whose estimated tax liability for the year is INR 10,000 or more, after TDS (taxes deducted at source), shall pay advance tax.
Therefore, credit of TDS is to be taken while calculating the advance tax liability.
However, if the amount is given or credited by payer without deduction of tax then the benefit of TDS cannot be given while calculating the advance tax liability.

​In case  the Assessing Officer’s estimation of current income is more than the assesse’s estimate then the assessee is required to file an intimation in Form no. 28A giving estimate of income and advance tax.
The estimation is required to be filled and signed by a person who is authorized to sign a return of income.
In case of a registered firm, the firm has to submit the estimate of advance tax payable, if any.

The individual partners have also to submit an estimate of the advance tax payable by eachpartner including therein the share of income from the registered partnership firm.​

In case of an HUF, which has no member and whose total income of the previous year is likely to exceed the maximum amount not chargeable to income-tax then a declaration is required to be filed from all members.​

​In case the Assessing Officer’s estimation of current income is more than the assesse’s estimate then he is required to send an intimation in Form no. 28A giving estimate of such reduced income and advance tax.
The form is prescribed under Rule 39 of the Income-tax Rules (Form No. 28A).​

Assessing Officer can serve an order requiring the assesse to pay advance tax, if he is of the opinion that such person is liable to pay advance tax.
 
–          However, if you feel that year advance tax liability is lower than the liability calculated by the income-tax officer; you may file an estimation of the income and amount of tax payable thereon
–          Such information should be submitted in Form No. 28A to the Assessing Officer
–         ​ Alternatively, In case the tax demand calculated by the Income-tax officer is lower than the tax liability computed by you, you should pay the advance tax as per your own computation.
–          No intimation to Income-tax officer is required to be made in such cases.

For computing the advance tax liability of the prevailing tax rates or the rates in force of the previous year for which the advance tax is to be computed are to be used.

​​Advance tax is liable to be paid in every case where the advance tax payable is Rs. 10,000 or more. A Resident Senior citizen not having any income from business/profession, is not liable to pay advance tax with effect from A.Y 2013-14 onwards.
An assessee who opts for the presumptive taxation scheme under section​ 44AD and section 44ADA is required to pay advance tax related to such business. However, advance tax can be paid during the financial year (immediately preceding to the assessment year) on or before March 15.
The computation of advance tax can be done in the following manner:
Income from salaries                                                                                                  xxx
Income from house property                                                                                     xxx
Income from Capital Gains                                                                                       xxx
Income from Business or Profession                                                                         xxx
Income from other sources                                                                                       xxx
Gross Total Income                                                                                                   xxx
Less: Deductions under sections 80C to 80U                                                           xxx     

Net Income                                                                                                                                                                                                                                                                         
Income Tax on Net Income                                                                                       xxx 
Less: Rebate under section 87A​                                                                                xxx  
Balance                                                                                                                      xxx     

Add: Surcharge, if any                                                                                              xxx                                                                                                                                                                       
Total                                                                                                                           xxx
Add: Health and Education Cess @4%                                        xxx
Total                                                                                                                           xxx
Less: Relief under section 89, 90, 90A or 91​                                                              xxx

Less: Pre-paid taxes (i.e. advance tax, self -assessment tax, TDS, TCS, MAT/AMT credit)   xxx

Advance Tax Liability                                                                                                  xxx

​​​​(A) Click here to view the step by step guide for payment of taxes.
(B) LAST DATE FOR PAYMENT OF SELF ASSESSMENT TAX
As per section 140(1) , Payment of income-tax on self-assessment should be done by the assessee before the date of filing of return of income. The payment made after the due date of filing return of income attracts interest under section 234A.
(C)LAST DATE FOR PAYMENT OF ADVANCE TAX
(b)   The due dates for payment of different instalments of advance tax are as follows :-
(i)    For assessees (other than those covered under section 44ADA of the Income-tax Act, 1961)
 
On or before 15^th June : 15% of advance tax
On or before 15^th Sept : 45% of advance tax
On or before 15^th Dec :75% of advance tax
On or before 15^th March: 100% of the advance tax
 
(ii)               For assessees covered under section 44AD and section 44ADA (under presumptive taxation scheme) of the income-tax Act, 1961, are required to pay advance tax on or before 15^th Mar

Note: The CBDT vide the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, dated 31-03-2020, has extended all respective due dates, falling during the period from 20-03-2020 to 29-06-2020, till June 30, 2020.

The benefit of extended due date shall not be available in respect of payment of tax. However, any delay in payment of tax which is due for payment from 20-03-2020 to 29-06-2020 shall attract interest at the lower rate of 0.75% for every month or part thereof if same is paid after the due date but on or before 30-06-2020.

​It is not necessary to make the payment of taxes from assessee’s own account in an authorized bank.
An assessee can make the payment from account of any person.
However, the challan for making such payment must clearly indicate the Permanent Account Number of assesse on whose behalf the payment is made.​