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Advance tax is an essential part of the Indian tax framework, requiring taxpayers (other than the senior citizens-not having income from business or profession) to estimate and pay their tax liability in instalments during the financial year rather than at the end in cases where tax payable for as financial year is Rs 10,000/- or more. This system helps the government maintain a steady flow of revenue and reduces the year-end tax burden on taxpayers. Section 211 of the Income-tax Act, 1961 lays down the rules regarding the instalments of advance tax and their due dates. While the section is clear about the scheduled dates for advance tax payments, an important and often overlooked aspect is the treatment of payments made after the last due date of 15th March but before the end of the financial year on 31st March.

Due Dates and Instalment Structure for Advance Tax

According to Section 211(1)(a) of the Income-tax Act, advance tax for the current financial year must be paid in four instalments, as follows:

Additionally, under Section 211(1)(b), assessees who declare their profits under the presumptive taxation schemes of Section 44AD or 44ADA are required to pay the entire advance tax amount in a single instalment on or before 15th March of the financial year.

Treatment of Payments Made After 15th March but Before 31st March:

A significant and beneficial provision for taxpayers is found in the proviso to Section 211. It states that: "Provided that any amount paid by way of advance tax on or before the 31st day of March shall also be treated as advance tax paid during the financial year ending on that day for all the purposes of this Act."

Key Implication:

This means that if a taxpayer misses the 15th March deadline for the final instalment, they still have the opportunity to make the payment between 16th March and 31st March. Such payments will still be considered advance tax for the financial year, thereby helping taxpayers avoid the consequences of underpayment or non-payment of advance tax under Section 234B.

Why This is Important:

1. Reduction in Interest Liability: If a taxpayer fails to pay the entire advance tax by 15th March but settles the balance by 31st March, they can avoid or reduce the interest liability under Section 234B.
2. Flexibility for Taxpayers: This provision offers an extended window for taxpayers to adjust their advance tax liability based on revised income estimates or last-minute income variations.
3. Recognition as Advance Tax: Even though the official deadline is 15th March, the law recognises payments made until 31st March as advance tax.

Illustration:

Suppose a taxpayer has an advance tax liability of ₹1,00,000 for the financial year. The instalment payments made are as follows:

Paid ₹15,000 on 15th June (15%)

Paid ₹30,000 on 15th September (making total payment 45%)

Paid ₹30,000 on 15th December (making total payment 75%)

Fails to pay the remaining ₹25,000 by 15th March but pays it on 28th March

In this case, the ₹25,000 paid on 28th March will still be treated as advance tax for the financial year and considered while calculating the total advance tax paid. This reduces the taxpayer’s exposure to interest under Section 234B.

Conclusion:

The flexibility provided by the proviso to Section 211 is a valuable relief for taxpayers who may face cash flow issues or income fluctuations near the end of the financial year. While the 15th March deadline is critical for compliance, the option to pay advance tax until 31st March ensures that taxpayers have an extended window to meet their obligations.

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Disclaimer:

This article is based on my personal understanding of relevant provisions of the Income-tax Act and judicial precedents and should not be construed as legal advice. Taxpayers should seek professional advice for specific matters.