Example for Advance Tax Calculation
Compute the amount of advance tax to be paid by Mr. Anil (age 45 years) from the following details provided by him (for the year 2023-24):
- Taxable business income ₹10,84,000.
- Interest on debenture ₹9,000 (after deduction of tax at source of ₹1,000).
- Deduction under section 80C, ₹81,333.
Answer:
Computation of taxable income and tax liability of Mr. Kapoor for the year 2023-24:
|
Particular |
Amount (₹) |
|---|---|
|
Profits and gains of business or profession |
10,84,000 |
|
Income from other source |
10,000 |
|
Gross total income |
10,94,000 |
|
Less: Deduction under section 80C |
(81,333) |
|
Total Taxabe Income |
10,12,667 |
|
Tax liability (WN) |
1,16,300 |
|
Less: Rebate under section 87A |
NIL |
|
Tax liability after rebate under section 87A |
1,16,300 |
|
Add: Health and Education Cess @ 4% |
4,652 |
|
Tax liability before TDS |
1,20, 952 |
|
Less: Tax deducted at source |
1,000 |
|
Tax liability after TDS |
1,19,952 |
Working Note:
|
Amount |
Tax |
|---|---|
|
Upto ₹2,50,000 |
NIL |
|
5% on ₹2,50,001 – ₹5,00,000 |
5% on ₹2,50,000 = ₹12,500 |
|
20% on ₹5,00,001 – ₹10,00,000 |
20% on ₹5,00,000 = ₹1,00,000 |
|
30% on above ₹10,00,000 |
30% on ₹12,667 = ₹3,800 |
|
Total Tax Liability |
₹1,16,300 |
Payment of Advance Tax:
|
Due Date to Pay tax |
Amount of Tax Payable |
|---|---|
|
On or before the 15th of June |
15% of 1,19,952 i.e., 17,993 |
|
On or before the 15th of September |
45% of 1,19,952 i.e., 53,978 |
|
On or before the 15th of December |
75% of 1,19,952 i.e., 89,964 |
|
On or before the 15th of March |
100% of 1,19,952 i.e., 1,19,952 |
Advance Tax Payment : Due Dates, Applicability and Procedure
Advance Tax is defined as an income tax paid on an estimated annual income to the government before the end of the financial year. The taxpayers estimate their total annual income for the financial year, calculate their tax liability based on this estimate, and make periodic payments of taxes. This means instead of paying a lump-sum tax amount at the end of a financial year, taxes are paid in installments on specific due dates decided by the tax authority.
Key takeaways from Advance Tax:
- Advance Tax is based on the principle of “Pay-as-you-earn”.
- In India, every person whose estimated tax liability for the year is ₹10,000 or more, shall pay “Advance Tax” [Section 208, Income Tax Act].
- A system of advance tax benefits both the government and the taxpayer. For the government, the advance tax system ensures a regular and timely inflow of revenue, and for taxpayers, it reduces the burden of paying lump-sum amounts at the end of a financial period.
Table of Content
- Who Should Pay Advance Tax?
- Advance Tax Due Dates For FY 2023-24
- How to Pay Advance Tax Online?
- Example for Advance Tax Calculation
- FAQs on Advance Tax