As March 15 is the last date to pay advance tax for the current financial year and only two days left, one needs to take a close look at the tax situation and deposit any balance advance tax.
But first a question arises as what is advance tax? The provisions of the Income-tax Act, 1961 (IT Act) create an obligation on individuals, professionals, businessmen, companies, etc, to discharge their annual tax liability by way of advance tax payments by specified dates through the financial year. Advance tax is essentially paying your own taxes before the end of financial year.
An individual is liable to pay advance tax if he has income from interest, commission, rent, business or profession, etc, on which no tax has been deducted at source (or tax has been deducted at a lower rate). Advance tax liability arises where the balance tax liability is R10,000 or more.
An individual is required to pay advance tax in three installments and companies are required to pay advance tax in four installments.
If during the year, you have not paid advance tax installments/paid lesser than the percentage specified, you will be required to pay interest of 1% per month under section 234C of the IT Act. If you have not paid any advance tax during the year or advance tax paid was less than 90%, then you will be liable to an additional interest of 1% per month under section 234B of the IT Act from 1st April 2012 till the date of payment of tax.
Payment guidelines: For payment of advance tax, the following procedure needs to be followed:
* Challan no ITNS 280 should be filled out with all the correct details of the taxpayer
* The filled challan along with amount should be submitted to any bank accepting tax payments.
* Keeping in view your convenience you can also pay tax online through any bank facilitating e-payment of taxes.
So, it is a good idea to take out some time to analyse if you have any advance tax liability and discharge the same by March 15, 2012. This will make you a tax compliant citizen and also save money on the interest payment.
The author is director KPMG