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If TDS is less than the tax payable for the financial year, then you have to pay the tax on the additional income also, and if the TDS is more than the tax that has been made liable to you, in that case the Income Tax Department will make the refund from the TDS that has already been paid in excess. Income Tax has to be paid only once in the year where as TDS may have to be deducted a number of times depending on the type of payments and parties involved. To file TDS we need to use challan - 281 and in the case of Advance Tax we use challan - 280
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If you are a salaried person there is tax deduction at source (TDS), which takes care of the tax payments for your salary. At the same time, there will be additional liabilities for income like interest on deposits, bonds and even capital gains which might require you to pay advance tax. Can there be a situation where more additional tax has to be paid and how will he come to know of this payment? Advance tax has to be paid in several installments in September, December and March. That is, you need to estimate your income and pay tax every quarter, and the entire tax that is due would have to be paid by March 15. As far as Ankit is concerned, even though hes paid two installments of advance tax amounting to Rs 70,000, hell know if hes paid adequate tax only after the financial year is complete. Is there a specific date for payment of the self-assessment tax and how does one tackle this situation? If the actual income of Ankit is higher than the estimated and the total tax liability comes to Rs 80,000, he will have to pay an additional Rs 10,000 as self-assessment tax. This is the tax paid before filing the income tax return. Calculate self-assessment tax: The difference between the tax paid and the tax payable becomes the selfassessment tax to be paid. You can figure out the self-assessment tax figure when you make the final income tax calculation. There is no specific date for paying this tax but it has to be done before you file your income tax return so that no further amount of tax remains to be paid.
PAYMENT OF ADVNCE TAX ON THE ESTIMATED TAXABLE INCOME BY ALL ASSESSEE (Other than companies) Due Date 15th September 15th December 15th March
Eg.: If an Assessees estimated tax payable for the full year is Rs.10,000 , he has to pay an Advance Tax of Rs.3,000 each in 1st & 2nd Installment & Rs. 4,000 in Final Installment. No Advance Tax need to be paid, if total tax payable for the year is less than Rs. 5,000. When employer deducts tax from Salary, employee need not pay Advance Tax. Non-payment or short payment of Advance Tax will attract penal interest.
Advance Tax Example : Mr. Sanjay estimates his income for the year 2007-2008 as on 1.9.2006. Details : Business Income 2,50,000 Interest from Bank & NSC 15,000 PPF Contribution 4,000 Life Insurance Premium 6,000 ELSS 10,000 TDS on Interest 1,100
Solutions : Taxable Income : (1&2) Rs. 2,50,000 + 15,000 = 2,65,000 (3 to 5) Rs. 4000, 6000, 10000 = (-) 20,000 = 2,45,000 Tax on 2,45,000 including EDU Cess @2% 24,480 Less : TDS on Interest 1,100 Total Tax Payable 23,280
Installment of Advance Tax Payable 1 st. - 30% on 23,380 payable on 15/09/06 7,014 2 nd. - 30% on 23,380 payable on 15/12/06 7,014 3 rd. - 40% on 23,380 payable on 15/03/07 9,352 Interest for short or non-payment of Advance Tax - sec.234B (b) If no advance tax is paid at all or if the aggregate of the tax paid by 31st March of the current financial year is less than ninety percent of tax determined as payable by the tax payer on completion of the assessment then interest @ 2% p.m. and at 1% from 1-6-1999 is charged on the deficit amount from 1st April of the following year upto the date of the assessment.
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In the example given under (a) above, if the net tax payable on assessment is increased to Rs. 11000/- then interest will be payable under (b) above since the total tax paid is Rs. 9500/- which is less than 90% of Rs. 11000/- which will be Rs.9900/-.Interest payable will be 2% p.m.on Rs. 1500/- (Rs.11000-9500) and it will be payable from 1-4-1996 till the date of completion of the assessment. [In addition to interest payable as refered to above, for deferment of advance tax and for non or short payment of advance tax, interest is also payable for non-filing or delayed filing of return of income. (Sec. 234A) ]