Income Tax: How Advance Tax Is Calculated And Paid?

In India, advance tax refers back to the revenue tax that’s paid by people, corporations, and companies prematurely, slightly than ready to pay all of it in a lump sum on the finish of the monetary yr.

For salaried people, advance tax is usually taken care of by TDS by employers. But different types of revenue comparable to curiosity on financial savings financial institution accounts, fastened deposits, rental revenue, bonds, or capital positive aspects enhance the tax legal responsibility. One’s tax legal responsibility must be estimated beforehand.

If tax quantities to greater than Rs 10,000 per yr, taxpayers must pay advance tax in quarterly installments (June, September, December and March).

Self Assessment Tax means the quantity {that a} taxpayer pays on the requisite revenue after deducting advance tax and Tax Deducted at Source (TDS).

It refers back to the extra tax paid by a person or entity to the federal government after calculating their whole tax legal responsibility for a specific monetary yr. This is normally performed when the taxpayer finds that the tax already paid, both by TDS (tax deducted at supply) or advance tax, is lower than the precise tax legal responsibility.

Also Read: Income Tax Return: Who Is Eligible To File ITR 1 Sahaj Form?

Self-assessment tax is calculated based mostly on the revenue tax charges and guidelines relevant for that specific monetary yr. The taxpayer will pay the self-assessment tax on-line by the revenue tax division’s web site or by visiting a delegated financial institution department.

Any tax paid on or earlier than March thirty first is handled as advance tax paid throughout the identical FY. The deposit of advance tax is made by challan ITNS 280 by ticking the related column, i.e., Advance Tax.

Who Is Liable To Pay Advance Tax?

As per part 208, each particular person whose estimated tax legal responsibility for the yr is Rs 10,000 or extra, shall pay his tax prematurely, within the type of ‘Advance Tax’. In this half you’ll be able to acquire information on numerous provisions regarding cost of advance tax by a taxpayer.

How is Advance Tax Calculated And Paid?

Advance tax is calculated as given under:

a) In case of all assessees (aside from the eligible assessees as referred to in part 44AD and 44ADA of the Income Tax Act):

At least to fifteen% On or earlier than June 15

At least to 45% On or earlier than September 15

At least to 75% On or earlier than December 15

100% On or earlier than March 15

b) In case of eligible assessee as referred to in part 44AD and 44ADA: 100% On or earlier than March 15.

The presumptive taxation scheme of part 44AD is designed to provide reduction to small taxpayers engaged in any enterprise (besides the enterprise of plying, hiring or leasing of products carriages referred to in part 44AE).

The presumptive taxation scheme of part 44AD might be adopted by following individuals :

1) Resident Individual

2) Resident Hindu Undivided Family

3) Resident Partnership Firm (not Limited Liability Partnership Firm)

An individual resident in India engaged in following professions can reap the benefits of part 44ADA:-

1) Legal

2) Medical

3) Engineering or architectural

4) Accountancy

5) Technical consultancy

6) Interior ornament

7) Any different occupation as notified by CBDT

How Is Self-Assessment Tax Calculated And Paid?

Self-Assessment Tax Calculation: After filling out your ITR type with the TDS and advance tax particulars (if paid), the system computes your revenue and checks whether or not tax continues to be payable. You must pay it after which fill within the challan particulars within the return earlier than submitting it.

Who Is Not Liable To Pay Advance Tax?

A resident senior citizen (i.e., a person of the age of 60 years or above throughout the related monetary yr) not having any revenue from enterprise or occupation will not be liable to pay advance tax.

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