CBDT warns of interest liability for delayed advance tax payment

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NEW DELHI : Central Board of Direct Taxes (CBDT) on Tuesday urged eligible taxpayers to pay their first instalment of advance tax by 15 June, cautioning that non-payment or short payment of tax will result in levy of interest.

Advance tax is applicable for assessees, including salaried employees, whose tax liability for the fiscal after accounting for taxes deducted or collected at sources, is 10,000 or more, the tax authority said. Resident senior citizens not having income from business or profession are not liable to pay advance tax.

The tax authority also said that electronic payment is mandatory for all corporations and assessees whose accounts are required to be audited. E-payment is convenient for other tax payers also as it ensures correct credit, CBDT said in a social media post.

Eligible tax payers have to pay their tax liability for the year in four advance tax instalments in June, September, December and March. While the first instalment only needs to be 15% of the full year tax liability, by the March instalment, the tax payer needs to have fully met the tax liability.

Advance tax and taxes collected or deducted at source are vital parts of the government’s revenue collection exercise as bulk of the direct tax revenue comes this way. It also makes it easier for the authority to collect taxes. TDS and TCS obligations help the tax authority to have greater oversight of economic activities. From 1 July, two more TDS provisions will kick in—one on virtual digital assets and another one on benefits given by businesses as part of their sales promotion efforts, under section 194R of the Income Tax Act. Both provisions were introduced in the Finance Act of 2022. The government has a target of 14.2 trillion in direct tax receipts in FY23.

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