BY SHOBA KANAKRAJ

MSTU, CHENNAI
 Advance tax means payment of tax in
advance before the year end within advance
tax due dates.
 It is paid in accordance with provision of
Income Tax Act 1961.
 The tax burden of tax payer get reduced by
paying instalment of advance tax periodically
in a year instead of paying total tax at the
end of the year.

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 AT is paid in instalments by calculating the projected
tax liability for a year and reducing the amount of
TDS deducted likely to be deducted.
 Total tax payable: xx
 Less TDS xx
 AT payable

 For Financial year 2016-17, the advance tax rates

and due dates are made similar for both corporate
and non corporate asessee, which are given below.

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S.No. Installment Due Date Advance tax %

1 First Installment On or before 15% of Advance tax

15 th June payable

2 Second On or before 45% of Advance tax

Installment 15 th payable
September

3 Third Installment On or before 75% of Advance tax

15th December payable

4 Fourth Installment On or before 100% of Advance tax

15 th March payable

MSTU, CHENNAI
 Fin Act 2016 is amended to include that if a
person choose for computation of profit or gains of
business on presumptive basis under section 44AD
then advance tax shall be paid in one instalment on
or before 15th March of that financial year.These
amendments will be effective from 1st June 2016.
 The government is discouraging taxpayers from
misusing the scheme and constantly changing their
option often. So if you opt for presumptive
continue for 5 years and if you want to opt out,
you’ll be barred from resuming presumptive for a
period of 5 years.

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 Condition
 If you are opting for the presumptive scheme,
you must-
 a. File presumptive scheme for at least 5
years in continuation.
 b. If you decide to show and file profits as per
regular business (ITR-3) before the end of
these 5 years, you will lose presumptive
benefits and disallowed from presumptive
taxation for the subsequent 5 years.
 Please note that 5 years shall be counted
starting the year in which you first file usual
taxes for such business.

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 As per the changes in the Budget of 2016, businesses with
turnover up to Rs 2 crores can opt for presumptive taxation
scheme. Earlier this limit was Rs 1 crore. The features of this
scheme-
 a. turnover must be less than Rs 2 crores.
 b. NET income shall be considered as 8% of your turnover
(net income will be considered 6% in case of digital receipts).
 c. No need to maintain accounting records.
 d. No need to pay advance tax (from FY 16-17, assessee
opting for presumptive taxation has to pay 100% advance
tax by 15th March of that particular financial year).
 e. No need to get your accounting records audited.
 f. can file your tax return in ITR-4 a much shorter and
simpler form than ITR 3
 Professionals have also been added in the ambit of
presumptive taxation. However, the time limit of 5 years
condition applies only to businesses.

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 Section 44ADA was introduced to extend the
scheme of simplified presumptive taxation to
specified professionals. Earlier, the
presumptive scheme of tax was applicable
only for small busines
 The following Indian assessees are eligible:
 Individuals, HUFs,Partnership firms (note that
limited liability partnerships are not eligible)
 Professionals mentioned under Section
44AA of the Income Tax Act, 1961, whose
total gross receipts are less than Rs 50 lakh
in a year are the eligible beneficiaries..
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  Higher of the following is offered as presumptive income:
 50% of the total receipts from the profession
 Income offered by the assessee from the profession Eg:
 Mr. Ram is a freelance interior decorator. His total receipts for the
financial year 2018-19 are Rs 30 lakh. His annual expenses are Rs
10 lakh towards rent, conveyance, telephone, travelling etc.

Under normal provisions Under Presumptive scheme

Gross receipts 30,00,000
Gross receipts 30,00,000
Less: 50% deemed 15,00,000
expenses
Less: Expenses 10,00,000
Net profit 15,00,000
Net profit 20,00,000 the net profit under the
presumptive scheme is lower than
the normal provisions. Hence, it is
beneficial for Mr Ram to offer his
income under the presumptive
scheme of taxation under section
44ADA.

MSTU, CHENNAI
 Earlier upto financial year 2015-16, the rate of
advance tax were different for corporate and non
corporate assessee. IT was 30%,60% and 100% for
Non corporate assessees. Ie 15th Sep,15Dec and
15th March.
 The last installment paid by Assessee on or
before 15th March, but he can pay it by
31stMarch, it also treats as Advance tax. Where
the Assessee does not pay any installment by
the due date, he shall be deemed to be an
Assessee in Default.

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 LIABLE
 All persons are liable to pay advance
tax if the total tax payable during the year is Rs. 10000 or
more.
Not liable:
 Resident Senior Citizen who is of the age of 60 years or
above, and does not have any income chargeable under the
head “Profits and Gains of Business or Profession”.
 A taxpayer, being individual, HUF or Firm but not LLP, opting
for presumptive taxation scheme u/s 44AD/44ADA

MSTU, CHENNAI
 The estimated total income is calculated on
the basis of past years.
 Suppose if sales for the 1st quarter is 3 lac,
then we can predict that the total sales for
the whole year would be around 12 lac. And
based on the net profit ratio of last year we
can predict the net profit of this year.

MSTU, CHENNAI
 Advance tax is computed on the estimated
total income.
 The taxpayer has to predict his total income
at the time of payment of advance tax.
 On such estimated total income, normal tax
rates are applied to find out the tax liability.
 The taxpayer can reduce estimated allowable
expenditures, rebates, deductions etc from
the estimated total income.
 He can also take claim of TDS deducted, if
any.

MSTU, CHENNAI
 The assessing officer is also empowered u/s
210(3) to pass order and issue notice of demand
requiring an assessee to pay advance tax for
financial year.
 For the purpose of computation of advance tax
the assessing officer may adopt the higher of the
following.
 The total income of the latest previous year in
the respect of which the assessee has been
assessed under regular assessment .
 The total income returned by the assessee in any
return of income for any previous subsequent to
the previous year for which regular assessment
has been made. Sec 209(1).

MSTU, CHENNAI
 Advance tax is paid in installment in
accordance with section 211.
 Every asseessee need to pay 100% of advance
tax by 15th march of the year.
 The payment can be made online or offline
(through bank).

MSTU, CHENNAI
 Challan no. 280 is used of payment of advance tax for both
online and offline payment.
 Any advance tax paid is adjusted with the total tax liability
and credit shall be given to the assessee in the regular
assessment Sec 219. For example- Mr. A paid Rs. 15000 as
advance tax and he computed his final tax liability at year
end Rs. 40000. So, now he has to pay only Rs. 25000 as self
assessment tax.

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 Any change in due date for payment of AT is
notified by the CBDT
 Recently for F.Y 2019-20 the CBDT has
extended the due date for payment of AT for
the Financial year 2019-20 from 15th
December 2019 to 31.12.2019 for NORTH
EAST REGION

MSTU, CHENNAI
 : Section 234E, which includes penalties for
delay in income tax return filing, will not be
applicable if a person files its return before
the extended date of return.
 Standard Deduction for Salary is now
50000/- for AY 2020-21

MSTU, CHENNAI
 In View of the Covid, Govt. has extended the due dates for
various actions. Due dates are as under:
 a)Furnishing the Audit Report u/s 44AB or Audit Report
under any other provisions of the Act31st October, 2020
 b)Filing ITR in case ofallassesses30th November,2020
 c)Last date for completion of Scrutiny Assessment for AY
2018.19 bydepartment31st March,2021
 d)Investment/payment for availing the benefits u/s 80C to
80GGC or investment for the purpose of Capital Gains31st
July, 2020
 e)TDS Payment related to March, 2020Can be paid upto
31st July with Interest of delayed period @ 9% per annum
(0.75% monthly)
 g)Advance Tax instalment falling due on 15/06/2020 (For
AY 2021-22)Can be paid upto 30/06/2020. Rate of
Interest for delay for this period would be 0.75% per
month for this window of 15 days
 h) Last date to link Aadhar will be31st March, 2021
MSTU, CHENNAI
 All delayed payments of advance tax, self
assessment tax, TDS, TCS, equalization levy, STT,
CTT made between 20th Mar 2020 and 31st Jul
2020 will be charged at reduced interest rate
i.e., 9% p.a instead of 12% p.a
 Waiver of interest u/s 234A where self assessment
tax is upto Rs 1 Lakh
 The due date for issue of notice, intimation, order,
investment in tax saving instruments, investments
for rollover benefit of capital gains under Income
Tax has been extended to 31st Jul 2020.


MSTU, CHENNAI