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HOME | MONEY | PERSONAL FINANCE | TAXATION |
June 16, 2000
- Banking |
Advance Tax: default and defermentGanesh Jagadeesh & Co
Also see: What is advance tax?
A person who has paid advance tax but the amount so paid is less than 90 per cent of the assessed tax, would be liable to pay simple interest as above on the difference between the assessed tax and the advance tax paid.
A person, who pays self-assessment tax after March 31 of the financial year but before the completion of assessment, shall be liable to pay the interest as mentioned above upto the date of such payment and for any shortfall between the assessed tax and the tax paid from that date to the date of completion of assessment.
Example: Jambhunath has not paid any advance tax as of March 31, 1999.
In case as a result of reassessment or re-computation of your income, the amount on which interest was initially payable is increased, you would still be liable to pay interest @ 2 per cent (1.5 per cent from June 1, 1999) per month from the date of regular assessment to the date of reassessment or re-computation of income.
Yes, there are some concessions given to a person sparing him of the interest if there is shortfall in payment of advance tax on capital gains or windfall gains such as lottery and horse racing. However, the tax on such income should be paid in the subsequent instalment or where there is no instalment due then before the end of the financial year.
Circumstance Rate of simple interest Applicable period Amount on which
interest is payable Advance
tax paid on or before September 15 is less than 30 per cent of (i – ii) 1.5% per month 3 months 30% of (i –
ii) - iii Applicable
tax paid on or before December 15 is less than 60% of (i – ii) 1.5% per
month 3months 60% of (i –
ii) - iv Advance
tax paid on or before March 15 is less than 100% of (i – ii) 1.5% per
month - 100% of (i
– ii) - v
Example: Assume that these are the financial details of Mungerilal for the FY 1999-2000 and the assessment was completed on July 31, 2000.
Cumulative advance tax
paid Should have paid Shortfall Interest On or before September 15, 1999 Rs 5,000 Rs 5,970 Rs 970 1.5% x 3 x 970 = Rs 44 On or before December 15, 1999 Rs 7,000 Rs 11,940 Rs 4,940 1.5% x 3 x 4,940 = Rs 222 On or before March 15, 1999 Rs 15,000 Rs 19,900 Rs 4,900 1.5% x 4,900 = Rs 74
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