Eminent Advance Tax Pronouncements


The Direct Taxation system in India is one of its kinds and includes its fair share of interesting and complex provisions and sections to be reckoned with. The concept of Advance Tax being one such provision includes depositing tax on income in advance by estimating the projected earnings for the year and then paying taxes accordingly on time-bound intervals instead of lump sum payments at year-end.

Section 208 of the Income Tax Act, 1961 includes the provisions pertaining to Advance Income Tax which stipulates that where total income tax liability is greater than INR 10,000 then tax is to be deposited under Challan 280 via online or offline mode with designated banks to the Income Tax Department. Interestingly, the concept of paying taxes online in India is on the rise as more than 85% of transactions are now done online.

The concept of Advance tax has been helping both the government and the taxpayers as there is a lesser chance of default in tax payments and collections which ultimately expedites the revenue collection mechanism of the Government. In fact, the Government can earn additional interest on advance receipt of taxes. In addition to that, it eases the burden of the taxpayers as taxes are paid in instalments and not in the lump sum. Thus, helping the government, businesses and individual taxpayers in managing their revenue and finances systematically.

As per Income Tax Rules 2018 the due date for payment of Advance Tax is:
  • ·         15% advance tax, on or before 15th June
  • ·         45% advance tax, on or before 15th September
  • ·         75% advance tax, on or before 15th December
  • ·         100% advance tax, on or before 15th March or closing of FY
A few Important Case Laws relating to Advance Tax have been summarised below:
  • M/s. MRF Ltd v/s the DCIT, 2016: The fact that an unanticipated income accrued in the last financial year cannot be a ground not to pay advance tax.
  • CIT v/s Sh. Surinder Kumar Khindri, 2017: The assessee was held to be entitled to an adjustment of cash seized against advance tax dues to be paid.
  • Premlata Jalani v/s Asst. CIT, 2002: Interest u/s 234C would be payable only for the months till which advance tax was not paid.
  • Rolta India Ltd. (SC): Interest under sections 234B and 234C shall be payable on the failure of the company to pay advance tax in respect of Minimum Alternate Tax.


Location: Building No 10 C, 10th Floor, Cyber City, DLF Phase – II, Gurgaon -122002

Comments

Post a Comment

Popular posts from this blog

Alimony and Taxation: Here’s what you need to know

For most women, getting divorced is a challenging step. It can be emotionally very disturbing and unsettling for many women and create a lot of confusion, be it emotionally or financially. Stress makes life further complicated and concentrating on finances becomes difficult. One needs to plan the process through and not proceed hastily. A part of this financial plan also includes understanding the  tax audit format .           If you are one of the many women planning your finances after divorce, here we help you familiarise with the taxation process on alimony:        When is alimony not taxable? Under various circumstances, it is decided the entire amount that is to be paid as alimony will be given in a lump sum instead of instalments over a long period of time. The entire amount is paid in cash which is also known as one-time receipt. According to Bombay High Court’s order, the amount that is paid as alimony should be treated as a capital asset. Under the Income Tax
Read more

A Brief – Cost Inflation Index and Taxation

Inflation can change the political scenario of a country. But what exactly is inflation in simple terms? Let’s take an example to understand inflation better – Often, the price of a commodity increases over time which leads to fall in purchasing power of money i.e. if 7 items can be bought for INR 700 today, tomorrow you may be able to buy only 5 items at the same price on account of inflation. This brings us to the tax jargon i.e. Cost Inflation Index (‘CII’), which calculates the estimated rise in the cost of goods and assets year-by-year as a result of inflation. What is the significance of CII and Indexation? It is used for computation of Capital Gains and related taxes. If the index is not used, the inflated prices increase your gains and more gains result in increased tax liabilities. Therefore, the use of CII is beneficial for a taxpayer. The entire process of adjusting the cost price of a capital asset with the effect of inflation using the CII number is referred
Read more

All you need to know about Stock Appreciation Rights (SAR) Taxation

Across the world many corporations, particularly multinational organizations, now favour ESOP (employee stock ownership plan) as a preferred mode of employee compensation. Unlike the regular salary that the employee draws periodically, this is an in-kind benefit that allows the employee to own a part of the company (in the form of stock ownership) either while undertaking employment or as part of regular reimbursement. This gives the employee a personal interest in the business and maintains the corporate culture in the company. Similar to the ESOP, many corporations also award their employees SAR or Stock Appreciation Rights. These may be declared from time to time as incentives or as bonus. Usually the employee is allocated stock options of the company (at current market value) and can be redeemed anytime after a year (till the period of employment or within any other term specifically mentioned). This means that the amount of appreciation of a specific number of shares of t
Read more