Advance Tax Payment: Due Dates and Interest on Late Payment

If the Income Tax Liability of any taxpayer is more than Rs. 10,000 in a financial year, then he is liable to pay such tax in installments during the year itself rather than paying this tax at the end of the year. This tax which is payable during the year is called “Advance Tax” or “pay as you earn tax” as tax is liable to be paid at the time the income is earned i.e. during the year rather than paying this tax at the end of the year.
Advance Tax receipts help the Govt. to receive a constant flow of tax receipts throughout the year so that expenses can be incurred rather than receiving all tax payments at the end of the year. Advance Tax is liable to be paid by all assesses like Salaried, Self Employed, Businessman etc. before the filing of Income Tax Return
For all taxpayers earning income from any source other than salary, Advance Tax is payable in installments as explained below.

Payment of Advance Tax

With effect from 1st June 2016, Advance Tax is liable to be paid as per the following schedule

In case of Assessees other than Companies

Due Date of Installment	Amount Payable
On or before 15th June	Not less than 15% of the Advance Tax Liability
On or before 15th Sep	Not less than 45% of the Advance Tax Laibility as reduced by the amount, if any, paid in earlier installment
On or before 15th Dec	Not less than 75% of the Advance Tax Laibility as reduced by the amount, if any, paid in earlier installments
On or before 15th Mar	100% of the Advance Tax Liability as reduced by the amount, if any, paid in earlier installments

In case of Companies

Due Date of Installment	Amount Payable
On or before 15th June	Not less than 15% of the Advance Tax Liability
On or before 15th Sept	Not less than 45% of the Advance Tax Laibility as reduced by the amount, if any, paid in earlier installment
On or before 15th Dec	Not less than 75% of the Advance Tax Laibility as reduced by the amount, if any, paid in earlier installments
On or before 15th March	100% of the Advance Tax Liability as reduced by the amount, if any, paid in earlier installments

Earlier the percentage of Advance Tax to be paid was different for Companies and other than Companies. However, Budget 2016 has standardised the rates for both companies and asseesses other than companies.
Payment of Advance Income Tax is to be made through Challan No. 280 by selecting Advance Tax (100) as the type of payment as shown below:-

Computation of Advance Tax

Advance Tax is liable to be paid by estimating the current year income and then applying the tax rates as per the Income Tax Slabs in force. The Advance Tax shall be computed as under:

	Income under the 5 Heads of Income	xxx
(Less)	Brought Forward Losses and Allowances	xxx
(=)	Gross Total Income	xxx
(Less)	Chapter VI-A Deductions	xxx
(=)	Estimated Total Income	xxx

	Income Tax on Estimated Total Income	xxx
(Add)	Surcharge (if any) on the above Estimated Income	xxx
(=)	Total Tax Payable	xxx
(Less)	Relief under section 89	xxx
(=)	Tax Liability	xxx
(Add)	2% Education Cess	xxx
(Add)	1% SHEC	xxx
(=)	Total Tax Liability	xxx
(Less)	Relief of tax u/s 90,90A,91	xxx
(Less)	MAT Credit u/s 115JAA	xxx
(Less)	TDS as shown in Form 16/Form 16A and reflected in Form 26AS	xxx
(=)	Advance Tax Liability	xxx

Payment of Advance Tax in case of Capital Gains

Although Advance Tax is liable to be paid on all incomes including Capital Gains, it is practically not possible to estimate the Capital Gains which may arise in an year. Therefore, in such cases, it is provided that if any such income arises after the due date of any installment, then, the entire amount of tax payable on such capital gain (after claiming exemption under section 54) shall be paid in remaining installments of Capital Gains which are due. If the entire amount of tax payable is so paid, then no interest on late payment will be levied.

Interest on Late Payment of Advance Tax

If the Income Tax is not payable as per the above schedule, Interest is liable to be paid for late payment of tax as follows

1. Interest under section 234C – Interest @ 1% per month is payable if the tax is not paid as per the above schedule i.e. for Deferment in Installments of Advance Tax
2. Interest under section 234B – Interest @ 1% is payable if 90% of the tax is not paid before the end of the financial year i.e. for Default in Payment of Advance Tax

For computing Interest u/s 234A/B/C and any other Interest, Income Tax shall be rounded off to nearest hundred and fraction of hundred shall be ignored

Interest under section 234C for Deferment of Payment of Tax

Interest under section 234C is liable to be paid @ 1% per month if

(a)	Advance Tax paid on or before 15th Sept	<	30% of the Tax Due on Returned Income
		OR
(b)	Advance Tax paid on or before 15th Dec	<	60% of the Tax Due on Returned Income
		OR
(c)	Advance Tax paid on or before 15th Mar	<	Tax Due on Returned Income
		OR
(d)	No Tax has been paid by the Assessee

Note: Tax Due on Returned Income

means the Tax on Total Income declared in

	Income Tax Return	xxx
(Less)	Relief of Tax u/s 90	xxx
(Less)	Relief of Tax u/s 90A	xxx
(Less)	Relief of Tax u/s 91	xxx
(Less)	MAT Credit u/s 115JAA	xxx
(Less)	TDS Paid	xxx
(=)	Tax due on Returned Income	xxx

No Interest would be levied in case the assessee is having Income under head “Profits and Gains of Business or Profession” for the first time.

Computation of Interest for Late Payment of Advance Tax u/s 234C

(a)	Rate	1% per month simple interest
	Period	9 Months
	Amount	15% of the “Tax due on Returned Income”
		(Less)   Advance Tax paid on or before 15th June

(b)	Rate	1% per month simple interest
	Period	6 Months
	Amount	45% of the Amount Due on Returned Income
		(Less) Advance Tax Paid on or before 15th Sept

(c)	Rate	1% per month simple interest
	Period	3 Months
	Amount	75% of the Amount Due on Returned Income
		(Less) Advance Tax Paid on or before 15th Dec

(d)	Rate	1% per month simple interest
	Period	3 Months
	Amount	Tax Due on Returned Income
		(Less) Advance Tax paid on or before 15th March

Interest under section 234B for Default in Payment of Tax

Interest @ 1% per month is payable if

(a)	Advance Tax Paid by the Assessee during the Previous Year	<	90% of the Assessed Tax
		OR
(b)	No Advance Tax is paid by the Assessee

Note: Assessed Tax means

	Tax determined u/s 143(1) or on Assessment u/s 143(3)/144/147/153A	xxx
(Less)	Relief of Tax u/s 90	xxx
(Less)	Relief of Tax u/s 90A	xxx
(Less)	Relief of Tax u/s 91	xxx
(Less)	MAT Credit u/s 115JAA	xxx
(Less)	TDS/TCS	xxx
(=)	Assessed Tax	xxx

In case Advance Tax paid by the Assessee is more than his actual Income Tax Liability, he can claim Refund of Income Tax by furnishing the details of tax deposited in the Income Tax Return

(Author can be reached at By- Sonu Mehla Mobile- 8285910007 E-Mail- sonuandfirm@gmail.com)