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Rashmin Sanghvi & Associates

Chartered Accountants

220, 2nd Floor, Arun Chambers,
Tardeo Road,
Mumbai - 400 034,
Maharashtra, India.

Tel. Nos.: (+91 22) 2351 1878, 2352 5694.

Fax : (+91 22) 2351 5275.

Email : [email protected]

Home Articles Taxation         Share :

Budget 2017Chapter H

36. Advance tax related amendments:

36.1 Advance tax instalment for professionals [S. 211]:

36.1.1 Finance Act 2016 introduced presumptive taxation scheme for certain professionals. Under this scheme, if a professional person has a turnover of upto Rs. 50 lakhs, 50% of gross receipts of professionals are presumed to be their income and tax has to be paid on it accordingly. Presumptive tax is already in place for small and medium businesses for past few years.

36.1.2 For payment of advance tax under presumptive tax scheme, persons having business are required to pay the entire advance tax in only one instalment – on or before 15th March of financial year. However, for presumptive tax scheme applicable to professionals, tax was required to be paid in 4 instalments - on 15th July, 15th September, 15th December and 15th March.

36.1.3 To bring parity in treatment, professionals are now required to pay entire advance tax in only one instalment – on or before 15th March of the financial year.

36.1.4 This amendment is applicable from FY 2016-17. Some professionals may not have paid advance tax till now for FY 2016-17. Now with this amendment, interest for short payment of advance tax for first 3 quarters of FY 2016-17 for such professionals will not be charged. However, these professionals are required to pay entire advance tax on or before 15th March 2017 (for FY 2016-17).

36.2 Advance tax on domestic dividends [S. 234C]:

36.2.1 Finance Act 2016 introduced tax on dividends above Rs. 10 lakhs for individuals, HUF and a firm (S. 115BBDA). The dividend has to be considered in computing advance-tax to be paid.

36.2.2 However, one never knows when the company may declare dividend. Normally dividend is declared at the Annual General Meeting which may happen in August. At times interim dividend is also paid which can be in any month. Further, one cannot know how much will be the dividend, or whether it will be declared at all. Therefore, due to uncertainty of dividend declaration, difficulty may arise in determining the advance tax liability in relation to that income. For example, if the company declares dividend in December, there will be a default of advance tax for June and September quarter. This can lead to interest liability on shortfall of advance tax payments.

36.2.3 Finance Bill provides that no interest will be levied in the quarter for shortfall in advance tax, if dividend has not been declared in that quarter. However, advance tax has to be paid in the subsequent quarters.

This provision is applicable from FY 2016-17 itself.