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Advanced Tax Payment - Frequently Asked Questions

Written by: CHETNAA GOYAL Posted on: 3 November, 2022

Frequently Asked Question's (FAQ) on Advance Tax

Is a Resident senior citizen granted exemption from payment of advance tax?

As per section 208, every person whose estimated tax liability for the year is Rs.10,000 or more, shall pay his tax in advance, in the form of "advance tax". However, section 207 gives relief from payment of advance tax to a resident senior citizen. As per section 207 a resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession, is not liable to pay advance tax.

What is the due date for payment of Advance tax ?

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 15th March.

Which tax rates are to be used for computing advance tax liability?

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.

Does credit of TDS allowed while calculating 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.

Who is not required to pay Advance tax?

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.
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.

Can payment of advance tax be made through any bank account?

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.

Can estimate of income be revised for the purpose of advance tax?

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 installment of advance tax in accordance with his revised estimate of current income and pay the advance tax accordingly.

How do advance tax paid get reflected in Form 26AS ?

Once the Advance Tax is paid, it will be reflected on assessee's Form 26AS within 3-4 working days of making the payment.

What should we do if the bank is closed on the last day for payment of advance tax?

Any taxes paid till 31st 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.

What should i do on receiving the notice from income-tax department for the payment of advance tax, if my actual income is more than what is determined by the tax officer?

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.

If a person adopts the presumptive taxation scheme of section 44AD, then is he liable to pay advance tax in respect of income from business covered u/s 44AD?

Any person opting for the presumptive taxation scheme under section 44AD is liable to pay whole amount of advance tax on or before 15th March of the previous year. If he fails to pay the advance tax by 15th march of previous year, he shall be liable to pay interest as per section 234B and section 234C.

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CHETNAA GOYAL

Chetnaa Goyal one of the co-founder of TaxSmooth. An Qualified Chartered Accountant. More than 12 years of Experience in Direct Taxation. having own Taxation Practice in Delhi. Expertise in Income Tax Cases, Return filing, Tax Planning, Tax Advisory etc.