(Last Updated On: February 13, 2017)

Professionals allowed to pay advance tax in single installment

[Section 211 and 234 of Income tax Act – Applicable from Assessment Year 2017-18 ]

Relevant extract from Budget Speech on Union Budget 2017-18 on 01.02.2017

171. Last year, I had announced a new scheme for presumptive taxation for professionals with receipt upto Rs. 50 lakhs p.a. In respect of such assessees, they are being given further benefit in terms of paying advance tax in one instalment instead of four.

Relevant Extract from Memorandum explaining Provisions of Finance Bill 2017

Rationalisation of section 211 and section 234C relating to advance tax

Section 211 of the Act provides for instalments of advance tax and due dates for depositing the same. Clause (b) of sub-section (1) of the said section provides that an eligible assessee engaged in an eligible business referred to in section 44AD is liable to pay advance tax in a single instalment on or before the 15th of March every financial year.

Vide Finance Act 2016, presumptive taxation regime has been extended to professionals also. Hence, it is proposed to amend the said clause (b) to provide that the assessee who declares profits and gains in accordance with presumptive taxation regime provided under section 44ADA shall also be liable to pay advance tax in one instalment on or before the 15th of March.

It is also proposed to make consequential amendments in sub-section (1) of section 234C to provide that in respect of an assessee referred to in section 44ADA, interest under the said section shall be levied, if the advance tax paid on or before the 15th March, is less than the tax due on the returned income.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent years.

[Clauses 73 & 74]

Relevant Extract of Clause 73 of Finance Bill 2017

Amendment of section 211.

73. In section 211 of the Income-tax Act, in sub-section (1), in clause (b), for the words, figures and letters “an eligible assessee in respect of an eligible business referred to in section 44AD”, the words, brackets, figures and letters “an assessee who declares profits and gains in accordance with the provisions of sub-section (1) of section 44AD or sub-section (1) of section 44ADA, as the case may be” shall be substituted.

Relevant Extract of Clause 74 of Finance Bill 2017

Amendment of section 234C.

74. In section 234C of the Income-tax Act, in sub-section (1),—

(i) in clause (a), for the words, figures and letters “an eligible assessee in respect of the eligible business referred to in section 44AD”, the words, brackets and letter “the assessee referred to in clause (b)” shall be substituted;

(ii) in clause (b), for the words, figures and letters “an eligible assessee in respect of the eligible business referred to in section 44AD”, the words, brackets, figures and letters “an assessee who declares profits and gains in accordance with the provisions of sub-section (1) of section 44AD or sub-section (1) of section 44ADA, as the case may be” shall be substituted;

Relevant Notes on Clause 73 of Finance Bill 2017

Clause 73 of the Bill seeks to amend section 211 of the Income-tax Act relating to instalments of advance tax and due dates.

Clause (a) of sub-section (1) of the said section provides that all the assessees, except those referred to in clause (b), are liable to pay advance tax in four instalments during each financial year and also provides the due dates for the payments and amounts payable.

Clause (b) of sub-section (1) of the said section provides that an eligible assessee engaged in an eligible business referred to in section 44AD is liable to pay advance tax in a single instalment on or before the 15th of March every financial year.

It is proposed to amend the said clause (b) so as to provide that the assessee who declares profits and gains in accordance with the provisions of sub-section (1) of section 44ADA, shall also be liable to pay advance tax in one instalment on or before the 15th of March every financial year.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Relevant Notes on Clause 74 of Finance Bill 2017

Clause 74 of the Bill seeks to amend section 234C of the Income-tax Act relating to interest for deferment of advance tax.

It is proposed to provide that in respect of an assessee referred to in section 44ADA, interest under the aforesaid section shall be levied, if the advance tax paid on or before the 15th day of March, is less than the tax due on the returned income. The said amendment is consequential to the amendment of section 211.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Books on Budget 2017-18

Taxmann’s Budget 2017-18 -Book

Budget 2017-18- Notifications on Central Excise , Customs and Service tax – New Book

Ajit Prakashan’s Union Budget 2017-18 -New Book

BDP’s Customs Law Manual (2017-18 Budget Editon with CD) -New Book

Professionals allowed to pay advance tax in single installment w.e.f AY 2017-18 u/s 44ADA