Advance Tax Provisions, Calculation and Due Dates [ FY 2019-20 ]

Advance Income tax represents tax that is paid before the end of a financial year i.e tax paid before 31^st March 2020 will be considered as advance tax for the Financial year 2019-20 (AY 2020-21).

In this article, we will discuss provisions of Advance Income tax, its calculation and due dates.

Applicability

As per section 208, every assessee whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his income tax in advance. This can be paid either on self-assessment or by an order of the Assessing Officer.

An assessee under presumptive taxation scheme of section 44AD or 44ADA is also liable to pay advance tax.

Exemption:  A resident seniorSenior Citizen means an individual of the age of 60 years or above during the relevant financial year citizen not having any income from business or profession is exempted from paying advance tax.   

I’ll walk you through the whole process !! 🙂

Step #1: Calculate your estimated tax liability for the year.

This can be done using various tools like Income tax calculator, filing appropriate offline ITR forms, and other third-party websites like Cleartax. In case of complex transactions use professional services.

If your income tax liability is Rs.10,000 or more. Go to step 2

Step #2: Divide your tax liability into 4 parts as per the table given below or use Advance Tax calculator.

Advance Tax Slab and Due Dates

**Late payment of advance tax will attract interest under section 234C and in case of default in the payment of any installments interest under section 234B will apply.

Example:

Mr.Ram, not paying tax under section 44AD or 44ADA, has an estimated income tax liability of Rs.1,00,000/- for The financial year 2019-20 (AY 2020-21). He is required to pay following advance tax:

After computing, advance tax liability pay it in the prescribed mode as mentioned in step 3

Step #3: Pay advance tax within the due dates in prescribed mode.

Mode of payment of advance tax

** In case of the bank holiday, pay advance tax on the immediately following working day.

💡 Wait – there’s more

Pay Advance Tax on an order of the Assessing Officer

An Assessing Officer may pass an order under section 210(3) requiring you to pay advance tax. Such an order may be passed during the financial year, but not later than the last day of February i.e 28^th Feb 2020.

If you estimate your annual income more than officer’s calculation, you can pay higher advance tax. This can be done to avoid interest payment.

However, if you estimate your annual income less than officer’s calculation you can challenge officer’s computation by filling Form No. 28A with him and pay advance tax accordingly.

Refund of Advance Tax

You are entitled to get a refund of the excess advance tax paid if the Assessing Officer is satisfied that the amount of tax paid by you or on your behalf for a financial year exceeds the amount of tax payable.

In order to get the refund, you should file your income tax (IT) return.