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CHAPTER – 16A: ADVANCE TAX PROVISIONS

The total income of an assessee for the previous year is taxable in the relevant assessment
year. For example, the total income for the P.Y. 22-23 is taxable in the A.Y. 23-24. However,
income-tax is recovered from the assessee in the previous year itself through:-

a. Tax deduction at source (TDS);

b. Tax collection at source (TCS);
c. Advance tax

Advance tax is payable by every person where the final tax payable after adjusting TDS is
Rs.10,000 or more. Advance payment of tax is also known as “Pay as you Earn” scheme.

The assessee is required to estimate his CURRENT INCOME for the year under various heads
and pay advance tax on due dates. However, in the case of, income by way of CAPITAL GAINS
and CASUAL INCOME, assessee is required to pay advance tax only after such income is earned.

Note: Tax paid before 31st March of the relevant previous year is called “Advance Tax”
e.g. tax paid between 01.04.2022 and 31.03.2023 shall be treated as advance tax paid for the
previous year 2022-23. Any tax paid after 31st March is called as Self-assessment tax.

What is self-assessment tax?

‘Self-Assessment Tax’ means final tax payable by the assessee on the returned income after
adjusting TDS, TCS and Advance tax.

Important: Tds credit can be taken only if it is deducted by the payer. If tax is not
deducted at source then no credit can be taken by the assessee.

Advance tax payable by assesse covered u.s.44AD & 44ADA:

An assessee who has opted Section 44AD or Section 44ADA, shall pay the whole amount of
Advance Tax in one installment on or before 15th March.

NOT APPLICABLE FOR SENIOR CITIZENS:

Advance tax provisions are NOT applicable in the case of a RESIDENT SENIOR CITIZEN not
having income by way of business or profession.

For all assesses:

Advance tax is payable as follows: For all assesses
• On or before June 15 15% (15%) of advance tax
• On or before September 15 30% (45%) of advance tax
• On or before December 15 30% (75%) of advance tax
• On or before March 15 25% (100%) of advance tax
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1. Discuss whether the following assesses are liable to pay advance tax for AY 2023-24:

• Where the total income of Mr.X (a non-resident) is Rs.4,00,000 (tds: nil)

• Where the total income of Mr.Y (a resident) is Rs.6,00,000 (tds: Rs.23,800)
• Turnover of Mr.A Rs.1,50,00,000; He has opted for section 44 AD.
• Gross receipts of a Doctor Rs.34,00,000. He has opted for section 44ADA.
• Mr.A owns 7 heavy commercial vehicles and he has opted for section 44AE.
• A senior citizen having pension income of Rs.3 lakhs and property income of Rs.5 lakhs

2. Mr.A, whose total sales is Rs.201 lakhs, declares profit of Rs.10 Iakhs for the F.Y. 2022-23. He is
liable to pay advance tax:–

(a) in one instalment

(b) in two instalments
(c) in three instalments
(d) in four instalments

3. Mr.Raj (a non-resident and aged 65 years) is a retired person, earning rental income of Rs.40,000
per month from a property located in Delhi. He is residing in Canada. Apart from rental income,
he does not have any other source of income. Is he liable to pay advance tax in India?

(a) Yes, he is liable to pay advance tax in India as he is a non-resident and his tax liability in
India exceeds Rs.10,000.
(b) No, he is not liable to pay advance tax in India as his tax liability in India is less than
Rs.10,000.
(c) No, he is not liable to pay advance tax in India as he has no income chargeable under the
head "Profits and gains of business or profession" and he is of the age of 65 years.
(d) Both (b) and (c)

4. The benefit of payment of advance tax in one installment on or before 15th March is available to
assessees computing profits on presumptive basis:—

(a) only under section 44AD

(b) under section 44AD and 44ADA
(c) under section 44AD and 44AE
(d) under section 44AD, 44ADA and 44AE

5. Mr.Jha, an employee of FX Ltd, attained 60 years of age on 15.05.2022. He is resident in India

during F.Y 2021-22 and earned salary income of Rs.5 lakhs (computed). During the year, he
earned Rs.7 Iakhs from winning lotteries. What shall be his advance tax liability for A.Y. 2023-24?
Assume he does not opt to pay tax under section 115BAC.
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(a) Rs.2,20,000 + cess Rs.8,800 = Rs.2,28,800, being the tax payable on total Rs.12 Iakhs
(b) Rs.2,10,000 + cess Rs.8,400 = Rs.2,18,400, being the tax payable on lottery income of
Rs.7 Iakhs
(c) Rs.10,000 + cess Rs.400 = Rs.10,400, being the net tax payable on salary income, since
tax would have been deducted at source from lottery income.
(d) Nil

6. An interior decorator has opted for presumptive taxation scheme u.s. 44ADA for A.Y. 2023-24:–

(a) He is liable to pay advance tax on or before 15.3.2023

(b) He is not liable to advance tax
(c) He is liable to pay advance tax in three instalments i.e., on or before 15.9.2022,
15.12.2022 and 15.3.2023
(d) He is liable to pay advance tax in four instalments i.e. on or before 15.6.2022, 15.9.2022,
15.12.2022 and 15.3.2023

7. The following details are provided by Mr.P, an individual, for the assessment year 2023-24.
Total estimated tax payable Rs.2,00,000
TDS (estimated but not deducted) Rs.55,000
Determine the advance tax payable with their due dates for the assessment year 2023-2024.

8. The estimated Total Income of Mr.R is Rs.9,00,000 which includes Rs.1,00,000 on account of LTCG
on sale of jewellery earned on 26.09.2022. Compute the advance tax payable by R, assuming
Rs.11,000 has been deducted at source.

9. Mr.K furnished the following information for the year ended 31.03.2023:
Income from business Rs.40,000
Lottery winnings (gross) Rs.6,00,000
Income by way of salary (computed) Rs.90,000
Loss from house property Rs.20,000

Compute his total income, tax liability and advance tax obligations.

INTEREST UNDER SECTION 234 A, B & C:

Interest u.s.234 A:
a. When interest is charged: If return is not filed before due date and tax is still due
b. Rate of Interest: 1% p.m. or part of a month on the tax due
c. Period of interest: From 1st day immediately following the due date till
taxes are paid
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note: Self-assessment tax paid before the due date and return submitted after due date:
If entire amount of taxes are paid before the due date of filing return, no interest
shall be charged for mere delay in filing the tax return.

note: Interest is to be calculated on the amount of tax due rounded off in multiples of
Rs.100 ignoring fraction. For eg. Tax due Rs.35730 or Rs.35,780; Interest will be
computed on Rs.35,700.

10. Taxable income of Mr.A for the year ending 31.03.2023 is Rs.10,00,000. Tax deducted at
source is Rs.37,000. Advance tax paid is Rs.25,000. Due date of filing return of income is 31st
July, 2023. Self-assessment tax including interest was paid on 25th September 2023 and
return was filed by Mr.A on the same day. Compute the interest payable u.s.234 A.

Would your answer differ if he had paid the self-assessment tax on 30.07.2023 but filed his
return of income on 31.10.2023.

Interest u.s.234 B:
a. When interest is charged: Failure to pay advance tax (or) advance tax paid is less than
90% of the “assessed tax”.

b. Rate of Interest: 1% p.m. or part of a month of the tax due commencing from 1st
April of the relevant assessment year and ending till the entire
tax is paid.

Note: For A.Y.2023-24, interest will be charged from 01.04.2023, if

advance tax is not paid before 31.03.2023.

Note: “Assessed tax” means Original tax (-) TDS

11. Tax on total income of Mr.X for the previous year 2022-23 is Rs.4,80,000. Tax deducted at
source Rs.80,000. Compute interest under section 234B in the following situations if:

a. No advance tax is paid by Mr.X and self-assessment tax is paid on 10.09.2023; or

b. Advance tax paid on 31.03.2023 is Rs.3,75,000

12. Mr.Mani, a resident individual, sold a plot of land on 20th March, 2023. Long term capital gain on
such sale amounted to Rs.5,00,000. Since he had no other income during the previous year 2022-
23, he did not pay any advance tax instalment. You are required to calculate the amount of
advance tax payable by Mr.Mani, if any.

Base your answer on the relevant provisions relating to the payment of advance tax on income
from capital gain and advise Mr.Mani suitably, so that the liability on late payment does not arise.
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Interest u.s.234 C:
a. When interest is charged: If the installments paid are not proper (i.e. amount paid is less
than the installment due)

b. Rate of Interest: 1% p.m. or part of a month

note: Interest u.s.234 C will be charged only up to 31st March of the relevant previous year.
Interest u.s.234 B will be charged from 1st of April of the relevant assessment year.

Note: An assessee is required to pay first two installments of 15% and 45% of the
“assessed tax” in advance on the due dates. However, interest u.s.234C shall not be
charged if the assessee had paid atleast 12% and 36% of the “assessed tax”.

13. Original tax due Rs.1,00,000; Tax deducted at source Rs.40,000; Compute interest payable
under section 234C in the following situations if:

a. No advance tax is paid by the assesse; or

b. Advance tax paid on:

15.06.2022 Rs.5,000
15.09.2022 Rs.10,000
15.12.2022 Rs.15,000
15.03.2023 Rs.20,000

c. Advance tax paid on:

15.06.2022 Rs.8,000
15.09.2022 Rs.14,000
15.12.2022 Rs.18,000
15.03.2023 Rs.14,000

14. Mr.Jay having total income of Rs.8,70,000, did not pay any advance tax during the previous
year 22-23. He wishes to pay the whole of the tax, along with interest if any, on filing the
return in the month of July, 2023. What is the total tax which Mr.Jay has to deposit as self-
assessment tax along with interest, if he files the return on 29.07.2023? Assume that he does
not exercise the option u.s.115BAC.

15. Ms.Priya, aged 61 years, has total income of Rs.7,50,000 including income from profession, for
A.Y.23-24, and has paid advance tax of Rs.10,000 on 13.12.2022. She has filed her return of
income of 15.06.2023. Calculate the self-assessment tax payable and the interest thereon
u/s.234A, 234B and 234C, if any by Ms.Priya.