The fiscal deficit has reached a four-year low of Rs 5.26 lakh crore or 35% of budget expectations.

The fiscal deficit has reached a four-year low of Rs 5.26 lakh crore or 35% of budget expectations

At the end of the first half of FY22, the central government’s fiscal deficit fell to a four-year low of Rs 5.26 lakh crore, or 35 percent of the budget predictions, thanks to strong tax revenues.

The fiscal deficit was Rs 9.1 lakh crore, or 114.8 percent of budget forecasts, at the same point last year.

According to data released Friday, the government collected more than 60% of the planned revenue receipts in the first six months of the fiscal year ending in September, the highest H1 collection ever.

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The government’s strong financial position is likely to keep bond yields low and allow the government to spend freely to help the economy recover.

Revenues nearly quadrupled to Rs 10.8 lakh crore in the first six months of this fiscal year, beating a 10% increase in expenditure and helping to reduce the budget deficit. The current fiscal year’s first-half fiscal deficit is even smaller than the pre-covid period of Rs. 6.5 lakh crore in H1 FY2020.

“Despite a dimming of the favourable base, the government of India’s gross tax receipts increased by 50% in September 2021, owing to solid advance taxes and the formalisation of the economy,” Aditi Nayar, ICRA’s chief economist, stated.

Tax receipts were Rs 9.2 lakh crore, or 60% of BE, while non-tax receipts were Rs 1.6 lakh crore, or 66% of BE.

With corporation tax, central goods and services tax, customs and excise duty collections exceeding half of the FY2022 BE in H1 FY2022, and rising vaccinations likely to boost confidence and spending in H2 FY2022, gross tax revenues could exceed the FY2022 Budget Estimate (BE) by at least Rs 2 lakh crore, according to Nayar. “A solid tax collection is gradually allowing the government to enhance expenditures by increasing expenditure,” India Ratings’ D K Pant and Paras Jasrai said.

In 1HFY22, revenue spending increased by 6.33 percent over FY21 and 7.35 percent over FY20. It was worth Rs 13.96 lakh crore, or 47.7% of BE. Capex increased to Rs 2.29 lakh crore, accounting for 41.4 percent of BE. The total outlay was Rs 16.26 lakh crore, or 46.7 percent of BE.

Special provision for the full value of consideration in certain cases.

“At the end of September 2021, the government still had an INR1.81 trillion cash surplus with the RBI (end-March 2021: INR1.82 trillion). With such a large cash surplus at the Reserve Bank of India, the government is in a good position to either increase spending or cut market borrowing “Pant and Jasrai agreed.

“In FY2022, we predict the Government of India’s fiscal deficit to be Rs. 13.8-14.8 trillion, or 6.0-6.5 percent of GDP, as opposed to the budgeted Rs. 15.1 trillion,” Nayar added.

Income Tax Payment in Advance – Schedule & Operating Model!

Income Tax Payment in Advance – Schedule & Operating Model

Advance tax means income tax should be paid in advance instead of lump sum payment at year-end.
Advance Tax should be calculated by estimating the current year income then applying tax rates.

TDS/ TCS & MAT credit shall be deducted to arrive at Advance Tax Liab.

Adv. Tax payments have to be made in instalments as per due dates as follows:-

  • 15% of Tax Liab. – 15 June (PY)
  • 45% of Tax Liab. – 15 Sept (PY)
  • 75% of Tax Liab. – 15 Dec (PY)
  • 100% of Tax Liab. – 15 Mar (PY)

Note: Tax Paid up to 31st Mar (PY) is treated as advance tax.

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Who Shall Pay Adv. Tax?

The advance tax applies to all taxpayers whether salaried or in business.

If your total tax liability >= Rs 10,000/- in a PY, you have to pay advance tax.

If Assessee opts for S-44AD/ 44ADA (Presumptive PGBP) then the due date of Advance Tax is 15th Mar (PY) [only 1 Installment].

Resident Sr citizens (>=60y age) who do not run a business, are exempt from paying advance tax.

How do I make an advance tax payment?

Advance tax payment is made using Challan 280 just like any other regular tax payment. You may read our detailed article on online payment of income tax.

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Consequences of Delay Payment/ Short payment?

S-234C- Interest for deferment of Advance Tax Installments. No Interest if the assessee has paid adv. Tax up to 12% in 1st Installment, up to 36% in 2nd Installment.

S-234B – Interest imposed for short payment of advance tax. (Not applicable if assessee paid 90% or more of Adv. Tax payable)

Note: If there is a change in Income due to Processing of Return u/s 143(1) or Assessment, then tax as per 143(1)/ Assessed Tax shall be taken instead of tax as per ROI. (Applicable for S-234B)

For further clarification, please refer to the link below:-https://www.incometaxindia.gov.in/tutorials/31.%20provisions%20on%20pymt%20of%20adv.%20tax.pdf

Tax-Saving Infrastructure Bonds: Find out how much tax you’ll have to pay at maturity and how to avoid TDS.

Tax-Saving Infrastructure Bonds: Find out how much tax you’ll have to pay at maturity and how to avoid TDS.

The long-term infrastructure bonds that were issued in FY 2011-12 to allow tax deductions of up to Rs 20,000 from taxable income are set to mature in FY 2021-22.

The long-term infrastructure bonds that were issued in the Financial Year 2011-12 to offer deductions of up to Rs 20,000 from taxable income under section 80CCF of the Income Tax Act are set to mature in the Financial Year 2021-22.

Although the bonds provided tax benefits under section 80CCF at the time of purchase, the bonds’ interest is taxable in the hands of investors.

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As a result, the tax-advantaged long-term infrastructure bonds were not really tax-free bonds.

The annual interest payout option and the cumulative interest option were both available to the investors.

While investors who chose annual interest distributions have already paid tax on the amount of interest received, those who chose the cumulative option would pay more tax in the year of investment than they saved in the year of investment.

Taxation

Because the interest on long-term infrastructure bonds is taxable, the interest earned by the investors – annually for those who chose the annual option and aggregate on maturity for those who chose the cumulative option – will be added to their taxable income.

As a result, tax payable will be lower for investors in lower tax bands and higher for those in higher tax brackets.

TDS

For Resident taxpayers who choose the cumulative option in physical format, the interest payment will be subject to a 10% Tax Deducted at Source (TDS) if the interest payment upon redemption exceeds Rs 5,000.

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The TDS rate will increase to 20% if the bondholder does not have a valid PAN or if the investor has not submitted his tax returns for the last two years and the total TDS and TCS in each of those years is Rs 50,000 or higher.

TDS will not be applied to investors who hold bonds in demat form.

TDS of 31.2 percent would be applied to interest payouts for non-resident taxpayers.

How can TDS be saved?


Resident bondholders must submit Form 15G / 15H, as appropriate, to avoid TDS. Those who did not disclose their PAN data at the time of investment must update their PANs with the various RTAs within the time frames set by the bond issuers.

Non-Resident bondholders must submit a tax officer’s order under Section 197 / 195 setting NIL / lower TDS rates to the appropriate RTAs before the deadline to guarantee that TDS is collected at the rates provided in the order.