1.What is Advance Tax?

Advance tax means income tax should be paid in advance instead of lump sum payment at year end. It
is also known as pay as you earn tax. These payments have to be made in instalments as per due dates
provided by the income tax department.

Who should pay Advance Tax?

Salaried, freelancers and businesses– If your total tax liability is Rs 10,000 or more in a financial year
you have to pay advance tax. Advance tax applies to all taxpayers, salaried, freelancers, and
businesses. Senior citizens, who are 60 years or older, and do not run a business, are exempt from
paying advance tax.

Presumptive income for Businesses–The taxpayers who have opted for presumptive taxation
scheme under section 44AD have to pay the whole amount of their advance tax in one instalment on
or before 15 March. They also have an option to pay all of their tax dues by 31 March.

Presumptive income for Professionals– Independent professionals such as doctors, lawyers,

architects etc. come under the presumptive scheme under section 44ADA. They have to pay the whole
of their advance tax liability in one instalment on or before 15 March. They can also pay the entire
amount by 31 March.

Due Dates for payment of Advance Tax

FY 2019-20 & FY 2018-19 for both individual and corporate taxpayers

Due Date Advance Tax Payable

On or before 15th June 15% of advance tax

On or before 15th September 45% of advance tax less advance tax already paid

On or before 15th December 75% of advance tax less advance tax already paid

On or before 15th March 100% of advance tax less advance tax already paid

For taxpayers who have opted for Presumptive Taxation Scheme under section 44AD & 44ADA –
Business Income
 Due Date Advance Tax Payable

On or before 15th March 100% of advance tax

Our Tax Experts will calculate your advance tax liability so you can pay your dues on time.

Frequently Asked Questions

 When should I pay advance tax

If your tax liability for a year after reducing TDS exceeds Rs 10,000, you will be liable for
payment of advance tax

 Is an NRI liable for payment of advance tax?

An NRI, who has an income accruing in India in excess of Rs 10,000, is liable for
payment of advance tax.

 I am a senior citizen having pension and interest income. Should I pay advance
tax?

Resident senior citizens not having income from business or profession are not liable
for advance tax.

 Will I be penalized if I do not pay advance tax?

Non payment of advance tax will result in levy of interest under 234B and 234C of the
Income tax Act, 1961.

 Can I claim deduction under 80C while estimating income for determining my
advance tax?

Yes. You can consider all these deductions while estimating your income for the year
for computing your advance tax liability.

 What happens if I miss the deadline for payment of the fourth installment of my
advance tax i.e. on 15 March

You can still go ahead with payment of advance tax on or before the 31 March of the
year. Such payment will still be treated as advance tax only.

 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.

2. What is double taxation?

Double taxation is the levy of tax by two or more countries on the same income, asset or
financial transaction. This double liability is mitigated in many ways, one of them being a tax
treaty between the countries in question. Let us try and answer some important queries you might
have about such agreements/treaties.

What is DTAA?
A tax treaty between two or more countries to avoid taxing the same income twice is known as
Double Taxation Avoidance Agreement (DTAA). This means that there are agreed rates of tax
and jurisdiction on specified types of income arising in a country. When a tax-payer resides in
one country and earns income in another country, he is covered under DTAA, if those two
countries have one in place. DTAAs can be either comprehensive, i.e. covering all types of
income or specifically target certain types of income. This depends on the types of
businesses/holdings of citizens of one country in another. Some of the common categories
covered under DTAAs are services, salary, property, capital gains, savings/fixed deposit
accounts, etc.

Does India have DTAAs too?

Yes. Being a hub for international investment and also forming a large number of emigrants,
India has understood the importance of DTAAs and has actively pursued this matter. For
instance, our country has 85 active agreements of this kind. Apart from these separate
international agreements, the Income Tax Act in itself provides relief from double taxation. This
is covered under Sections 90 and 91. In case of any conflict, the provisions of DTAA will be
binding.

Can you provide an example?

Let us take the DTAA between India and Singapore for example. Under this, capital gains of
shares in company are taxed based on residence. It helps in curbing revenue loss, avoiding
double taxation and streamline the flow of investments.

So, what are the advantages of having such an agreement?

Since there is no dual taxation, countries having DTAAs tend to become lucrative investment
hubs. This helps in attracting foreign investment into a country and its subsequent development.

DTAAs are beneficial for NRIs too. If they earn income both in India and the country of current
residence, the income earned in India would be taxed both in India and the country of residence.
If India has a DTAA in place with the said country, NRIs can either avoid paying tax twice or
pay a lower rate of tax.
On a more non-tangible front, DTAAs provide both formal and informal trust between countries,
which translates into diplomatic benefits and cordial relationships.

3.Advance Ruling
The scheme of advance rulings was introduced by the Finance Act, 1993.
Chapter XIX-B of the Income-tax Act, which deals with advance rulings,
came into force with effect from 1-6-1993. Under the scheme the power of
giving advance rulings has been entrusted to an independent adjudicatory
body. Accordingly, a high level body headed by a retired judge of the
Supreme Court has been set-up. This is empowered to issue rulings, which
are binding both on the Income-tax Department and the applicant. The
procedure prescribed is simple, inexpensive, expeditious and authoritative.

Advance Ruling means written opinion or authoritative decision by an Authority

empowered to render it with regard to the tax consequences of a transaction or
proposed transaction or an assessment in regard thereto. It has been defined
in section 245N(a) of the Income-tax Act, 1961 as amended from time-to-time.

Applicant —

Under section 245N an advance ruling can be obtained by the following

persons:-

a. a non-resident

b. a resident-undertaking proposing to undertake a transaction with a non-

resident can obtain advance ruling in respect of any question of law or
fact in relation to the tax liability of the non-resident arising out of such
transaction

c. a resident who has undertaken or propose to undertake one or more

transactions of value of Rs.100 crore or more in total [vide Notification No.
73, dated 28-11-2014]

d. a notified public sector company

e. any person, being a resident or non-resident, can obtain an advance ruling

to decide whether an arrangement proposed to be undertaken by him is an
impermissible avoidance arrangements and may be subjected to General
Anti Avoidance Rules or not

f. an applicant as defined in section 28E(c) of the Customs Act, 1962

g. an applicant as defined in section 23A(c) of the Central Excise Act, 1944

h. an applicant as defined in section 96A(b) of the Finance Act, 1994

Salient features: —
 a. relates to a transaction entered into or proposed to be entered into by the
applicant: -

 The advance ruling is to be given on questions specified in relation to such a

transaction by the applicant.

 b. Questions on which ruling can be sought:—

i. Even though the word used in the definition is "question", it is clear

that the non-resident can raise more than one question in one
application. This has been made amply clear by Column No. 8 of the
form of application for obtaining an advance ruling (Form No. 34C)

ii. Though the word "question" is unqualified, it is only proper to read it as

a reference to questions of law or fact, pertaining to the income tax
liability of the non-resident qua the transaction undertaken or proposed
to be undertaken.

iii. The question may be on points of law as well as on facts; therefore,

mixed questions of law and fact can also be included in the application.
The questions should be so drafted that each question can be replied in
brief answer. This may need breaking-up of complex questiona into two
or more simple questions.

iv. The questions should arise out of the statement of facts given with the
application. No ruling will be given on a purely hypothetical question. A
question not specified in the application cannot be urged. Normally a
question is not allowed to be amended but in deserving cases the
Authority may allow amendment to one or more questions.

v. Subject to the limitations, the question may relate to any aspect of the
non-resident's liability including international aspects and aspects
governed by double tax agreements. The questions may even cover
aspects of allied laws that may have a bearing on tax liability such as
the law of contracts, the law of trusts and the like, but the question
must have a direct bearing on and nexus with the interpretation of the
Indian Income-tax Act.

vi. Advance Rulings can be obtained to determine whether an

arrangement, which is proposed to be undertaken by any person being
a resident or a non-resident, is an impermissible avoidance
arrangement as referred to in Chapter X-A or not (General Anti
Avoidance Rules).

 c. Time-limit for advance ruling:—

 The Authority shall pronounce it advance ruling within 6 months of receipt of

the application.

 d. Binding nature of advance ruling:—

The effect of the ruling is stated to be limited to the parties appearing before the
authority and the transaction in relation to which the ruling is given. This is
because the ruling is rendered on a set of facts before the Authority and cannot
be for general application.