Rationalisation
of advance tax payment schedule under section 211 and charging of interest
under section 234C
Budget
2016: As per
the existing provisions of sub-section (1) of section 211, the advance tax
payment schedule for a company is fifteen per cent, forty-five per cent,
seventy-five per cent and hundred per cent of tax payable on the current income
to be paid by 15th June, 15th September, 15th December and 15th March
respectively. For other assessees, the advance tax payment schedule is thirty
per cent, sixty per cent and hundred per cent of tax payable on current income
to be paid by 15th September, 15th December and 15th March respectively.
Based on the
recommendations of Expenditure Management Commission clubbed with the fact that
most of the advance tax is now paid electronically it is proposed to
rationalise schedule for advance tax payment and prescribe the same advance tax
schedule for all assessees other than an eligible assessee in respect of
eligible business as referred to in section 44AD. The modification in payment
schedule will facilitate forecasting of revenue collections during a financial
year with greater accuracy.
It
is further proposed that an eligible assessee in respect of eligible business
referred to in section 44AD opting for computation of profits or gains of
business on presumptive basis, shall be required to pay advance tax of the
whole amount in one instalment on or before the 15th March of the financial
year.
Consequential
amendments are also proposed to be made to section 234C which provides for
chargeability of interest for deferment of advance tax to bring it in sync with
the amendments proposed in section 211.
It is also proposed
that interest under section 234C shall not be chargeable in case of an assessee
having income under the head “Profits and gains of business or profession” for
the first time, subject to fulfillment of conditions specified therein.
These
amendments will take effect from 1st day of June, 2016.
TABLE
SHOWING CHANGES IN ADVANCE TAX
Changes in
Advance Tax Payment Due dates for All assesse **
|
Instalment
|
Due Date
|
Rate
|
|
1st
|
15th June
|
15%
|
|
2nd
|
15th September
|
45%
|
|
3rd
|
15th December
|
75%
|
|
4th
|
15th March
|
100%
|
** Except
for Individuals opted Sec.44AD (Presumptive Income) – Due Date is 15th
March.
Clause 87 of Finance Bill 2016
Clause
87 of the Bill
seeks to amend section 211 of the Income-tax Act relating to instalments of
advance tax and due dates.
As per the
existing provisions of sub-section (1) of the aforesaid section, the
advance tax payment schedule for a company is fifteen per cent., forty-five per
cent., seventy-five per cent. and hundred per cent. of tax payable on the
current income by 15th June, 15th September, 15th
December and 15th March, respectively. For assessees (other than
companies), the advance tax payment schedule is thirty per cent., sixty per
cent. and hundred per cent. of tax payable on current income by 15th September,
15th December and 15th March, respectively.
It is
proposed to amend the advance tax payment schedule for assessees (other than
companies) and bring it in consonance with the existing advance tax payment
schedule applicable for a company.
It is
further proposed that an eligible assessee in respect of eligible business
referred to in section 44AD opting for computation of profits or gains of
business on presumptive basis, shall be required to pay advance tax of the
whole amount in one instalment on or before the 15th March of the
financial year.
These
amendments will take effect from 1st June, 2016.
Clause
89 of Finance Bill 2016
Clause 89
seeks to amend section 234C of the Income-tax Act relating to interest for
deferment of advance tax.
It is
proposed to make consequential amendments in sub-section (1) of section 234C,
in view of the amendments made in section 211, so as to levy interest on
deferment of advance tax, in the same manner as applicable to the company, to
an assessee (other
than
company) also. Further, with regard to an eligible assessee referred to in
section 44AD, it is proposed to provide that interest shall be levied, if the
advance tax paid on or before the 15th day of March is less than the tax due on
the returned income.
It is also
proposed to amend the said section so as to provide that nothing contained in
the said sub-section (1) shall apply to any shortfall in the payment of the tax
due on the returned income where such shortfall is on account of under-estimate
or failure to estimate income under the head “Profits and gains of business or
profession” in cases where the income accrues or arises under the said head for
the first time.
These
amendments will take effect from 1st June, 2016.
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