DELAY IN TAX AUDIT DUE TO ONGOING ASSESSMENT IN SOME OTHER ACT. PENALTY U/S 271B TO BE DELETED

Penalty u/s 271B must be removed if a tax audit is delayed due to an ongoing assessment under another Act.

The assessee filed a return of income on January 6, 2016, which was inspected under Section 143. (3). Because the assessee’s total turnover/gross receipts surpassed the Rs.1 crore threshold, he was required to have his accounts audited under Section 44AB of the Act and submit the audit report before the deadline, which in this case was October 31, 2015. Because the accounts were not audited within the time limit, Ld. AO imposed a penalty of Rs.1,12,715/- under section 271B.

The sentence was upheld by CIT(A) on appeal. Assessee preferred an appeal to the tribunal after being aggrieved by the order.

The ld. AR argued before the tribunal that there was adequate cause for the audit to be delayed because the assessee was a cooperative society governed by the Tamil Nadu Cooperative Societies Act, 1983 and its rules. The society’s finances could not be audited for the relevant AY until the assessment was completed. Because the assessee society was not in charge of the matters connected to the appointment and completion of the audit under the aforementioned Act and Rules, the delay in the completion of the audit was not due to any fault on their part. As a result, this qualifies as fair cause, and the penalty was eliminated.

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On the other hand, the Ld. DR justified the sentence by claiming that it was imposed in conformity with the law. After hearing both parties, the ITAT determined that there was adequate cause for the late filing of the income tax return and audit. The assessee was audited under the Tamil Nadu Cooperative Societies Act, 1983, and its implementing rules.

The assessee had no control over the appointment of an auditor or the execution of the audit. It should also be highlighted that the audit was eventually finished on December 31, 2015, and the assessee promptly filed a return. As a result, ITAT removed the penalty.

Do you have to pay tax in advance? hurry up! The deadline is March 15.

Do you have to pay tax in advance?  hurry up! The deadline is March 15.

When an income is paid, taxes are usually deducted/collected at the source. However, because not all incomes are subject to TDS and the tax deducted at source may be less than the applicable slab rate, the remaining tax due must be paid in advance. Let’s look at the advance tax provisions that apply to individuals.

Who has to pay advance tax and when do they have to pay it?

Every taxpayer whose tax due, after deducting TDS and TCS, exceeds Rs. 10,000/- is required to pay advance tax in four instalments on the 15th June, 15th September, 15th December, and 15th March of the financial year, in the ratios of 15%, 30%, 30%, and 40%, respectively. Any advance tax shortfall in any of the instalments must be made up in the next instalment. So, if you haven’t made any instalments for the current year, you can discharge your whole advance tax liability by March 15th. The advance tax burden on capital gains and dividends income can be discharged in instalments due after the income is accrued.

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People who are subject to the presumptive scheme of taxation under Sections 44AD and 44ADA can pay their advance tax in one instalment on March 15th. If you are a senior person with no income from a business or profession, you are free from paying advance tax, which must be paid before the ITR filing deadline.

Interest is due if there is a deficiency or if advance tax is not paid.

You must pay interest of 1% each month for each delay or deficiency in advance tax. Because the next instalment is due after three months, even if you miss the due date by one day, you essentially pay interest for three months. If your advance tax debt is Rs. 1 lakh and you fail to pay the Rs. 15,000/- due on the 15th of June, you will be charged interest of Rs. 450/-, even if you pay it on the 16th of June.

advanced tax

Any advance tax paid by March 31st of the following year is likewise considered advance tax. So, if you fail to pay the advance tax instalment by the 15th of March, or if you pay it on the 15th but still have a shortfall, you can pay it by the 31st of March 2022, but you will have to pay penal interest of 1% for one month in addition to the interest you must pay for any shortfall in previous instalments.

What happens if an advance tax liability is not paid by the financial year’s end on March 31st?

If you are unable to pay the full amount of advance tax, you can pay it under the name of self-assessment tax at a cost. For non-payment or a deficiency in advance tax payment, you must pay interest at 1% per month or part of a month from April 1st of the following year until you really pay the self-assessment tax. If the shortfall does not exceed 10% of your total tax liability, no interest will be charged. This is in addition to the interest that will be charged if advance tax is not paid during the year.

How to decrease tax liability by planning your income tax.

It’s important to remember that if you don’t pay your advance tax on time, you’ll have to pay penalty interest of 1% per month from April 1st to the date of actual payment of self-assessment tax. You’ll also have to pay penalty interest if you file your ITR after the due date, which is usually July 31st for salaried and most tax payers. This interest is payable from the due date of the ITR to the actual filing date of the return. Even if you have already paid your self-assessment tax by the due date for filing your income tax return, you will be charged interest.

What happens if you pay more tax in advance than you owe?

If you pay more tax than your actual tax burden, either through advance tax or TDS, you can seek a refund for the difference, but you’ll have to file an ITR to get it. Furthermore, you are entitled to interest at a rate of 6% per annum on any excess tax paid.

Under section 234c of the Internal Revenue Code, failure to pay advance tax results in interest.

  • 11 Mar 2022
  • Income Tax
  • Comments Off on Under section 234c of the Internal Revenue Code, failure to pay advance tax results in interest.

Under section 234c of the Internal Revenue Code, failure to pay advance tax results in interest.

Every person with a net tax liability of $10,000 or more for the fiscal year must pay advance tax. This applies to everyone, whether a salaried employee, a professional, a business owner, a firm, or a corporation. A resident senior citizen (i.e., someone who is 60 years old or older during the relevant financial year) who does not earn money through a business or profession is not required to pay advance tax.

The year’s income and tax liabilities are estimated, and a certain percentage of the tax liability is paid at each due date during the year.

If you don’t pay your advance tax by the due date, you’ll be charged interest under sections 234B and 234C, respectively. When the advance tax paid is less than 90% of the tax owed, interest is due under section 234B. Late payment of advance tax is subject to interest under section 234C.

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There is no requirement for advance tax payment for salaried individuals whose tax is deducted at source unless they have other sources of income such as capital gains, interest income, rental income, and so on.

Kavita, for example, earns an annual salary of Rs. 8 lakh, from which her employer has deducted the mandatory TDS (tax deducted at source). On June 30, 2021, she sells shares worth 5 lakh and achieves a short-term capital gain of 2.5 lakh.

Once a capital gain has occurred, it shall be considered for payment of advance tax on or before the following due date, i.e., advance tax on capital gains should be paid for the due dates of 15 September, 15 December, and 15 March in this example.

Kavita’s tax due on 2.5 lakh in short-term capital gains is $39,000 (at 15% plus cess). If Kavita has not paid any advance tax, she can pay the total tax owed of $39,000 on or before March 31 to avoid interest under section 234B.

advance tax

However, interest under section 234C for late payment of advance tax will still be due because she has not paid advance tax.

For the purpose of determining advance tax due, all deductions, exemptions under the Income Tax Act, and credits to the extent of TDS, tax collected at source (TCS), and minimum alternate tax (MAT) utilisation must be taken into account.

Anita, for example, earns a total of 12 lakh from professional services. She has paid a 1.5 lakh insurance premium. A total of $50,000 in TDS has been deducted.

Anita’s total tax burden, after taking into account the deduction u/s 80C for insurance premiums, is $132,600, with 50,000 TDS deducted. As a result, Anita’s net tax burden stays at 82,600, and she is required to pay advance tax at the stated percentage on the due dates.

How to decrease tax liability by planning your income tax.

For example, Akash now earns a salary of Rs. 12 lakh, from which his employer has deducted the requisite TDS. Akash earns interest on a 25,000-dollar fixed deposit. Interest income is taxed at 30% plus cess for a total of $7,800. Because his net tax burden is less than $10,000, Akash believes he does not need to pay advance tax on interest income. In this scenario, Akash is correct in his assumption.

Samrat, for example, is a non-resident Indian who earns a rental income of 15 lakhs from a residence in India. As a result, his tax liability for FY 2021-22 is expected to be $132,600. On December 31, 2021, Samrat turned 60 years old. He believes that because he is a senior citizen with no business or professional income, he is not required to pay advance tax. Samrat’s belief is incorrect because he is a non-resident Indian and hence is not exempt from paying advance tax. This benefit is only accessible to residents who are over the age of 65 and do not have a source of income from a business or profession.

As we approach the conclusion of the fiscal year, if you have any long or short term capital gains and wish to save tax on them, you should consider booking capital losses that may arise as a result of the present market scenario to offset any existing capital gains.

As a result, there will be no capital gains tax burden and no question of advance tax liability. It’s worth noting that only long-term capital losses can be deducted from long-term capital profits. Long-term/short-term capital gains can be offset by short-term capital losses.