FAIRFILED INSITITUTE OF MANAGEMENT AND TECHNOLOGY

EXPLAIN THE CONCEPT OF ADVANCE TAX,

DISCUSS THE SAME IN CONTEXT OF ASSESSEE

TAXATION LAW
403

Submitted to: MS. SONAM Submitted by: Harshita Gupta

(Assistant Professor) Enrolment No- 04490103517
B.B.A LL.B 7th Sem. /Sec A
 INDEX
S.NO. CONTENT PAGE NO.
1 Objective 1

2 Introduction 2

3 What is income? 3

4 What is advance income? 4

5 Who is an assessee? 4

6 FOLLOWING ARE THE PROVISIONS AN ASSESSEE 5

NEEDS TO FOLLOW DURING PAYMENT OF
ADVANCE TAX
7 Due Date for payment of Advance Tax 6

8 Eligibility to pay advance tax 6

9 Who are exempted from paying Advance-tax? 7

10 How do an assessee pay this Advance-tax? 7

11 How does an assessee show Advance tax details in my 7

Income-tax return?
12 How to calculate Advance tax? 7

13 How does an assessee show Advance tax details in my 8

Income-tax return?
14 Conclusion 9

15 References 9
OBJECTIVE

The Objective of this assignment is to:

1. Develop further understanding of the theories and other concept of Advance Tax and its
context with assesses under Taxation Law.

2. To develop a practice of learning new aspect of the subject and develop habit of research
related to subject.
INTRODUCTION
The Indian Income Tax department is governed by the Central Board for Direct Taxes (CBDT)
and is part of the Department of Revenue under the Ministry of Finance. The government of
India imposes an income tax on taxable income of individuals, Hindu Undivided Families
(HUFs), companies, firms, co-operative societies and trusts (Identified as body of Individuals
and Association of Persons) and any other artificial person. Levy of tax is separate on each of the
persons. The levy is governed by the Indian Income Tax Act, 1961 and Rules framed there
under.
WHAT IS INCOME?
Income tax can be generally described as that proportion or percentage of the income of a person
that is payable to the government for public infrastructure development and payment of salaries
to the employees of the government. The income tax paid by the country's taxpayers leads to a
large proportion of government revenues. The Income Tax in India is imposed on the
implementation of laws and the Income Tax Act, 1961, is the law regulating the provisions of
our income tax.

There are 2 types of taxes:

1. Direct taxes are taxes paid directly by individuals to the Government. They can be
categorized further into two groups, i.e. corporate taxes charged by businesses on the
profit they earn from business and income tax paid to the government by the country's
citizens.
2. Indirect taxes are certain taxes that are raised and then charged by a third party to the
government. Examples of indirect taxes are taxes levied on restaurant bills, movie
counters, etc.
Any Indian person who earns or receives an income may be a resident or non-resident of the
country subject to Income Tax. A citizen's source of income can be from his salary or pension or
from a savings account or even from prize money; they are all liable for taxation.

Classification of Income earned by Indian Citizens into the below mentioned Income heads
according to the Tax Slabs:
 Income from salary – The income obtained from salary and pension is put below this
head.
 Income obtained from other sources – Income obtained from Savings Bank Account or
Fixed Deposit or prize money is considered under this category.
 Income obtained from house property – This income head deals with the rental income.
 Income from Capital Gains – This income is obtained by sale of mutual funds, shares,
etc.
  Income obtained from business and other profession – This is when a person is working
as a freelance or is self- employed tuition teachers, LIC agents, etc.

Income-tax is sub divided into following sub heads:

I. Advance tax:
II. TDS (Tax Deducted at Source)
III. Self-Assessment Tax

WHAT IS ADVANCE TAX?

The taxpayer estimates his annual in advance and thereby total tax liability. Tax is required to be
paid in the financial year in which income is received and hence it is also called as “pay-as-you-
earn” scheme.

Liability of a Person to pay Advance Tax (Section 208): In case of salaried taxpayers, tax on
salary is deducted and paid by the employer. So, the advance tax would be payable only if they
have any other income besides salary and which is not reported to their employer. Further,
Advance–tax is mandatory only if the net tax liability for the financial year (after considering
TDS and tax relief) is Rs. 10,000/- or more. The Education Cess and Secondary Higher
Education cess shall also be considered for the purpose of calculating the Tax Liability.

Who is an assessee?
An assessee is any individual who is liable to pay taxes to the government against any kind of
income earned or any losses incurred by him for a particular assessment year. Each and every
person who has been taxed in the previous years for income earned by him is treated as an
Assessee under the Income Tax Act, 1961.

An Assessee may be any individual liable to pay taxes for himself or to pay tax on behalf of
somebody else. The Income Tax Act, 1961 has classified Assessee in different categories. An
Assessee may either be a normal Assessee, a Representative Assessee, a Deemed Assessee or an
Assessee in Default.
 FOLLOWING ARE THE PROVISIONS AN ASSESSEE NEEDS TO FOLLOW DURING
PAYMENT OF ADVANCE TAX

Due Date for payment of Advance Tax

There are some due dates for the payment of advance tax provided in Section 211. The Advance
Tax shall be paid by the Individuals and Corporate Tax Payers other than tax payers who has
opted for Presumptive taxation scheme for Business or Profession Covered u/s 44AD or u/s
44ADA respectively. The due dates for payment of Advance Tax in case of individuals and
companies are as follows:

The due date for payment Amount of advance tax to be paid

On or before 15th June Atleast 15% of tax liability

On or before 15th
Atleast 45% of tax liability less earlier installment
September

On or before 15th December Atleast 75% of tax liability less earlier installments

On or before 15th March 100% of tax liability less earlier installments

Some important rules about Advance Tax:

1. If the tax liability in the previous financial year is less than Rs. 10,000/- then taxpayer
need not to pay advance tax in the current financial year. E.g. – Mr. Ravi's total tax
liability for financial year 2017-18 is Rs. 8,650/-. Hence, Mr. Ravi is not required to pay
any advance tax installment for the financial year 2017-18.
2. Advance tax is payable on capital gains. However one cannot estimate the exact capital
gain advance so as to pay his advance tax installment. Hence, if taxpayer is having any
capital gain after the due dates of advance tax installment, then such tax liability shall be
paid in remaining installments.
3. The Assessee who is carrying business and opting for presumptive taxation scheme have
to pay its Advance Tax in one installment by 15/03/20xx.
Eligibility to pay advance tax

If an assessee earn income only from salary, and no other sources, he need not pay advance tax
because the employer has already deducted the TDS. He is only liable to pay advance tax if he is
a salaried taxpayer who is earning income from other sources along with your salary. Mentioned
below are the sources of income that are liable for advance tax. These include:

 Earnings received in the form of fixed deposit interest

 Income from capital gain on sale of shares
 Earnings from a lottery
 Income or rent generated from a house property.

Who are exempted from paying Advance-tax?

Exemption for payment of Advance-tax is applicable to the following:

1. Senior Citizen who does not have any Income from Business.
2. Others having Tax Liability less than Rs 10,000/- after considering TDS and Tax Relief
on Income.

How does an assessee pay this Advance-tax?

An assessee can visit a nearby Nationalized Bank and make payment of Advance Tax.
Advance tax can be paid through online mode too.

1. By using the Income Tax Department's website and fulfilling all the requirements
necessary such as choosing the challan, filling the form and verification of documents
etc.
2. Filing ITR on official website of National Securities Depository Limited.

How does an assessee show Advance tax details in my Income-tax return?

Assessees are required to give challan details to your employer before the end of the Financial
Year, so that he will consider it in your Form-16 and deduct TDS accordingly. If an assessee
miss it, he can further declare it while filing your Income-tax return in Advance Tax section
under Tax Paid option.

How to calculate Advance tax?

You do not need a professional to compute your advance tax, as an assessee can do the needful
independently. You just need to follow the below-mentioned steps:
 Estimate the income
Calculate the income an assessee receive except the earnings from salary. Also, include any
agreements, which may be paid later.
 Deduct the expenses
Subtract all expenses from the income; these include work-related costs such as phone/Internet
bills and travel costs, among others
 Calculate the total income
Add up income, which an assessee might earn from interest or rent; he need to deduct the TDS
from his salary
 Calculate the advance tax
In case tax liability exceeds INR 10,000, an assessee will be liable to make a payment for
advance tax.

How does an assessee show Advance tax details in my Income-tax return?

An assessee is required to give challan details to his employer before the end of the Financial
Year, so that he will consider it in your Form-16 and deduct TDS accordingly. If an assessee
miss it, he can further declare it while filing your Income-tax return in Advance Tax section
under Tax Paid option.
CONCLUSION
After completing my research on this topic of assignment, I’ve gathered knowledge about
Income Tax Act, 1961 and its provisions related to Advance tax.
Advance tax is a sub head of Income tax and an assessee needs to fulfill the requirements while
payment of advance tax. An assessee has to check upon the due dates and tax liability in the year
of payment. An assessee is liable for payment of advanve tax when he has earning from other
sources than salary. A senior citizen and citizens having tax liability less than Rs. 10000 are
exempted from paying advance tax. An assessee can pay his advance tax either online or offline.
Therefore, it is a liability and duty of an assessee to pay advance tax during assessment year by
fulfilling all the requirements.

BIBLIOGRAPHY
Book:
Income Tax by Dr. Girish Ahuja; Maximan Publishing House

Websites:
https://cleartax.in/s/advance-tax
https://help.myitreturn.com/hc/en-us/articles/219418328-TDS-Advance-tax-Tax-Payments