When Advance Tax is payable ?
As per Section 208 of the Income Tax Act, 1961, Advance tax is payable during a financial year by all assessees having income tax liability of Rs. 10,000 or more for the relevant assessment year. In other words, advance tax for Assessment Year 2019-20 is payable in Financial Year 2018-19 itself, by estimating the current year income and applying the tax rates in force.
When Advance Tax is NOT payable ?
As per Section 207 of the Income Tax act, 1961, 207, advance tax is payable by all assessees during any financial year, in accordance with the provisions of sections 208 to 219, in respect of the current taxable/ total income, except in the case of following resident individuals:
(a) who does not have any income chargeable under the head “Profits and gains of business or profession”; and
(b) who is of the age of sixty years or more at any time during the previous year.
Besides, salaried individuals are not required to pay any advance tax, as they are subject to TDS provisions to meet their tax obligations.
How Advance Tax is Calculated ?
As per Section 209 of the Income Tax Act, 1961, the liability for advance payable is normally determined by the Assessee, however in certain circumstances the same may be determined by the Assessing Officer as well.
Assessee can make advance tax calculation by first estimating the current income (after reducing net agricultural income) and income-tax liability thereon based on tax rates in force in the financial year.
The income-tax liability so calculated shall be reduced by the amount of tax deducted/ collected (TDS/ TCS) and MAT Credit in respect of the said financial year.