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

| 1 year ago

ADVANCE TAX

Advance Income tax represents tax that is paid before the end of a financial year i.e tax paid before 31st 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 !! 🙂

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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

Sl no Assessee 1st installment Up to 15th June 2019 2nd installment Up to 15th Sept. 2019 3rd installment Up to 15th Dec 2019 4th installment Up to 15th March 2020
1 Paying taxes under section 44AD or 44ADA 0 0 0 100% of advance tax
2 All other Assessee up to 15% of Advance Tax up to 45% of Advance Tax up to 75% of Advance Tax upto 100% of advance tax

**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:

Particulars Up to 15th June 2019 Up to 15th Sept. 2019 Up to 15th Dec 2019 Up to 15th March 2020
Advance tax Liability 15000 45000 75000 100000
Less
Advance tax Already Paid 0 15000 45000 75000
 
Advance tax payable 15000 30000 30000 25000

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

                                    Assessee Mode of payment
1 Corporate assesses Electronic Payment
(mandatory)
2 All other assesses who is liable for Tax Audit (section 44AB) Electronic Payment
(mandatory)
3 Any other Assessee Physically in Challan no.280
or
Electronic Payment

** 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 28th 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.

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