Computation of Advance Tax Liability and Payment - Section 209 - Income Tax - Ready Reckoner - Income Tax

Computation of Advance Tax Liability and Payment - Section 209 The amount of advance tax payable by an assessee in the financial year on his own accord as per section 210(1) or (2) or (5) or (6) on the estimated current income shall be computed as follows:- Estimate the current income of the financial year for which the advance tax is payable. STEP I Compute tax on such estimated current income at the rate(s) of tax given under part III of the First Schedule of the relevant Finance Act. STEP II On the net tax, if any, computed at step II, add surcharge if applicable. STEP III Add Health Education Cess to the amount computed under step IV. STEP IV Allow relief, if any, under section 89 , 90 , 90A 91 . STEP V Deduct credit, if allowable, under section 115JAA (MAT credit) or 115JD (AMT credit) of the tax paid in earlier years. STEP VI Deduct the tax deductible or collectible at source during the financial year from any income (as computed before allowing deduction admissible under the Act) which has been taken into account in computing the current income [ section 209(1)(d) ]. STEP VII The balance amount is the advance tax payable provided it is ₹ 10,000 or more. However, it will be payable in certain installments as mentioned above. STEP VIII Note:- If the tax was deductible or collectible at source but was not deducted by the payee of the income or not collected by the collector, then such TDS or TCS which was deductible or collectible shall not be reduced for computing advance tax liability of the assessee. Computation of Tax by Assessing Officer [ section 209(1)(b) read with section 209(2)(a) ] The Assessing Officer, for determining the advance tax payable by the assessee under section 210(3) 210(4) , shall take the current income of the assessee to be the higher of the following two: The Total Income of the latest previous year in respect of which the assessee has been assessed by way of regular assessment (it will also include agricultural income of such previous year which has been taken into account for rate purposes); or The Total Income returned by the assessee for any previous year subsequent to the previous year for which regular assessment has been made (it will also include agricultural income of such previous year which has been taken into account for rate purposes). Tax on above current income at the rate in force during the financial year will be calculated by the Assessing Officer. From such tax calculated, the amount of income-tax which would be deductible or collectable at source during the said financial year shall be reduced and the amount of income-tax as so reduced shall be the advance tax payable. Note: Net Agricultural Income to be taken into account for Computing Advance Tax.