Advance Payment, Collection and Recover of Tax

Provisions relating to Advance Payment of Tax

SECTION 4: TAX PAYABLE BY AN ASSESSES SHALL BE PAID IN ADVANCE

Who is liable to pay advance tax (Section 208)When the advance tax payable by any person for the assessment year Immediately following the financial year is 10,000 or more.
Amount of Advance Tax payableTax on Total Income
Less: Rebate and relief
Add: Surcharge
Less: Tax deducted at source and Tax collected at source
Due Date of Installment in a relevant
previous year
Amount payable by Corporate AssessesAmount payable by Non-Corporate Assesses
On or before June 1515% of Advance tax payableNot Applicable
On or before September 1545% of Advance tax payable30% of Advance tax payable
On or before December 1575% of Advance tax payable60% of Advance tax payable
On or before March 15100% of Advance tax payable100% of Advance tax payable

Note :
1. Any amount paid by way of advance tax on or before 31st March of the relevant previous year shall also be treated as advance tax paid during the financial year ending on that day.

2. If the due date of payment of advance tax is a banking holiday, the Assessee can make the payment on the next immediately following working day. In such cases, no interest shall be leviable u/s 234B or 234C.

Interest on late payment of advance tax:

If the advance tax is not paid as per the rule mentioned above, interest for late payment is levied as below:

  1. Interest under Sec 234C: Interest @1% per month
  2. Interest under Sec 234B: Interest @1% per month is payable if 90% of the tax is not paid before the end of the financial year

Provisions relating to Collection of Tax

PROCEDURE FOR PAYMENT OF TAX UNDER A DEMAND NOTICE ISSUED u/s 156

1. The due date for payment of tax [Section 220(1)]: Any amount of tax other than advance tax specified as payable in a notice of demand u/s 156 shall be paid within 30 days.
2. Reduction of time limit: If the Assessing Officer has any reason to believe that it would be detrimental to revenue, if the full period of 30 days as aforesaid is allowed, he may, with the previous approval of the Joint Commissioner, direct that the sum is to be paid within any period less than 30 days.
3. Extension of time limit: The Assessing Officer may extend the time on the basis of an application made by the Assessee to pay the tax demanded u/s 156(1) or allow payments by installments subject to conditions as he may think fit to impose.

CIRCUMSTANCES OF ASSESSEE BE TREATED AS DEEMED TO BE IN DEFAULT

1. Assessee deemed to be in default [Section 220 (4)]: The Assessee shall be deemed to be in default if the amount specified in the notice u/s 156 is not paid within the time allowed or within such extended time u/s 220(3).

2. The amount of default [Section 220(5)] Where the payment is allowed by installments, the amount of default shall be the amount outstanding. All the other installments shall be deemed to be in default on the same date as the installment actually in default.

3. Circumstances under which the Assessee is not deemed to be in default:

(a) If the Assessee presents an appeal to the CIT (Appeals), the Assessing Officer may, in his discretion and subject to such conditions as he may think fit to impose, treat the Assessee as not being in default as long as the appeal is not disposed of. [Section 220(6)]

(b) Where the income of an Assessee arising in India is assessed in a Country where the laws prohibit or restrict the remittance of money to India, such an Assessee shall not be treated as Assessee in default in respect of tax due on the income which cannot be brought into India. [Section 220(7)]

(c) Where the demand in dispute has arisen because the Assessing Officer has adopted an interpretation of law in respect of which there are conflicting High Court decisions and the Department has not accepted the interpretation of the Court, the Assessee shall not be deemed in default. [Circular No.530/ 6-3-1989]

(d) Where the demand in dispute relates to issues which are decided earlier in the Assessee’s favour by an appellate authority / Court in his own case (say, for preceding assessment years), the Assessee shall not be deemed to be in default to the extent of tax liability relatable to such disputed points. [Circular No.530/6-3-1989]

CONSEQUENCES OF NON-PAYMENT OR DELAY IN PAYMENT AT TAX AS DEMANDED BY NOTICE u/s 156

Interest for belated payment of tax: [Section 220(2)]

1. Interest: If the amount demanded as per notice u/s 156 is not paid within the period specified in that notice, the Assessee shall be liable to pay a simple interest @ 1 % per month or part of a month. 2.

2. Period of Interest: The period of interest shall be from the day immediately following the end of the period mentioned in the notice ending with the day on which the amount is paid,

3. Penalty : [Section 221]

(a) Where the Assessee is in default or deemed to be in default in making payment of tax, the Assessing Officer may direct the Assessee to pay a penalty not exceeding the amount of tax in arrears,

(b) The penalty may be levied even if the tax is paid belatedly but before the levy of such penalty.

4. Opportunity to Assessee: The Assessee shall be given a reasonable opportunity of being heard.

5. No penalty: In case the Assessee proves to the satisfaction of the Assessing Officer that the default was for good and sufficient reasons, no penalty shall be levied.

6. Refund of penalty: In case the amount of tax was wholly reduced in any final order, then the penalty levied shah be canceled and the amount of penalty paid shall be refunded.

Provisions relating to Recovery of Tax

CERTIFICATE OF RECOVERY u/s 222(1)

1. Certificate of Recovery [Section 222(1)]: When an Assessee is in default or deemed to be in default in payment of tax, the Tax Recovery Officer may draw up a statement under his signature in Form No.57 specifying the amount of arrears due from the Assessee. Such a statement is called Certificate.

2. The Assessee cannot dispute the correctness of any certificate drawn up by the TRO on any ground. [Section 224]

3. It is lawful on the part of the TRO to cancel the certificate for any reason he thinks necessary so to do or to correct any clerical or arithmetical mistake therein. [Section 224]

MODES OF RECOVERY OF TAX UNDER THE PROVISIONS OF THE ACT, BY THE TAX RECOVERY OFFICER

1. Modes of Recovery of tax [Section 222]: In accordance with the rules laid down in the Second Schedule, the amount specified in the certificate may be recovered by any one or more of the following modes –

(a) Attachment and sale of the Assessee’s movable property,

(b) Attachment and sale of the Assessee’s immovable property,

(c) Arrest of the Assessee and his detention in prison,

(d) Appointing a receiver for the management of the Assessee’s movable and immovable properties.

2. Movable and immovable property includes any property which has been transferred directly or indirectly by the Assessee to his spouse or minor child or son’s wife or son’s minor child for inadequate consideration and the same is held by such persons.

3. Property held by major: Any movable property or immovable property transferred to the minor child or son’s minor child shall be treated as the Assessee’s property even after the minor attains majority.

4. The Tax Recovery Officer may take action u/s 222(1) for recovery of tax arrears even though any other proceedings for recovery of arrears have been taken,

OTHER MODES OF RECOVERY [Section 226]:

1. Applicability: Section 226 is applicable in the following situations:

(a) No certificate u/s 222 has been drawn by the Assessing Officer

(b) Where a certificate has been drawn u/s 226, the Tax Recovery Officer, without any Prejudice to the modes of recovery specified in Section 222, can recover by any one or more of the other modes u/s 226.

2. Modes of Recovery:

ModeTax arrears due fromArrears of tax to be deducted byPayment of sum deductedOther Provisions
Attachment Of Salary [Section 226(2)]Salaried EmployeePerson paying salary to such personTo the credit of Central GovernmentNot applicable where the salary is exempt from attachment
under the Code of
Civil Procedure
Garnishee Order (Section226(3)]Any AssesseeAny Person from
whom money is due
or may become due
to the Assessee or any person who holds any money for the Assessee jointly with
any other person
To the credit of Central GovernmentRefer Pt.3 Below
Recovery from money belonging to Assessee lying in Courts custody
[Section
226(4)]
Assessee whose money is in Courts custodyCourtTo the AO or TRO to the extent of liability
Recovery of arrears
of tax of tax by distraint and sale [Section 226(5)]
Any AssesseeNot ApplicableNot ApplicableIt should be authorized by the CIT/CCIT by general or special order.The distraint or sale shall be made in the manner as that for an attachment and
sale of movable Property attachable by actual seizure

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