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Regarding due date of Advance Tax for the 4th Installment of FY 2019-20

2 Jul    Direct Taxation
Jul 2

Regarding due date of Advance Tax for the 4th Installment of FY 2019-20

As per “THE TAXATION AND OTHER LAWS (RELAXATION OF CERTAIN PROVISIONS) ORDINANCE, 2020, NO. 2 OF 2020 (the Ordinance), IN CHAPTER II, Point No. 3(1) where, any time limit has been specified in or prescribed or notified under, the specified act which falls during the period from the 20th Day of March, 2020 to the 29th Day of June, 2020 or such other date after 29th June, 2020 as the Central Government may, by notification, specify in this behalf, for the completion or compliance of such actions and where completion or compliance of such action has not been made within such time, then, the time limit for completion or compliance of such action shall, notwithstanding anything contained in the specified Act, stand extended to the 30th day of June, 2020, or such other date after the 30th day of June, 2020, as the Central Government may, by notification, specify in this behalf.”

From the above words of the Ordinance No. 2 of 2020, we can interpret that due date of Payment of Advance Tax for the 4th instalment (instalment payable as on 15.03.2020) of FY 2019-20 was 15th March, 2020 because 15th day of March does not fall during the period from the 20th day of March to 29th Day of June, 2020.

Moving further to Point No. 3(2) of the Ordinance, “Where any due date has been specified in, or prescribed or notified under, the specified Act for payment of any amount towards tax or levy, by whatever name called, which falls during the period from the 20th day of March, 2020 to the 29th day of June, 2020 or such other date after the 29th day of June, 2020 as the Central Government may, by notification, specify in this behalf, and such amount has not been paid within such date, but has been paid on or before the 30thday of June, 2020, or such other date after the 30th day of June, 2020 as the Central Government may, by notification, specify in this behalf, then, notwithstanding anything contained in the specified Act,-

(a) the rate of interest payable, if any, in respect of such amount for the period of delay shall not exceed three-fourth per cent. for every month or part thereof;

(b) no penalty shall be levied and no prosecution shall be sanctioned in respect of such amount for the period of delay.

Explanation.- For the purposes of this sub-section, “the period of delay” means the period between the due date and the date on which the amount has been paid.

From the above words of the Ordinance No. 2 of 2020, we can interpret that, if payment of advance tax for the 4th instalment of FY 2019-20 has not been paid or has been paid on or before the 30th Day of June, 2020 or such other date after 30th Day of June as the Central Govt. may specify, the rate of interest for the default made in delay in payment shall be 0.75% per month or part thereof, i.e. 9% p.a.

For Example,

  1. An Assessee being individual below age 60
  2. Total tax liability Rs. 50,000 (including cess)
  3. Due date for furnishing Income Tax Return for AY 2020-21 is 31/07/2020 (assumed)
  4. Actual date for furnishing Income Tax Return for AY 2020-21 30/07/2020
  5. Assessee has not paid any instalment of advance tax during FY 2019-20 for AY 2020-21

Solution:

He will be liable to pay interest u/s 234B at 0.75% per month or part thereof calculated from 01.04.2020. Therefore his interest on tax liability u/s 234B for four months (since u/s 234B period for calculating interest on tax payable starts from 1st April of the Assessment year relevant to the previous year to the date of furnishing the return) will be Rs.  1,500. And u/s 234C will be Rs. 2,400.

Therefore, his total tax liability including interest will be Rs. 53,900.

Conclusion:

  1. As per the Ordinance No. 2 of 2020, we can say that due date for the payment of 4th installment of advance tax for FY 2019-20 (AY 2020-21) has not extended and it was 15th Day of March, 2020.
  2. But default made in payment of the 4th installment of advance tax for FY 2019-20 will attract 0.75% interest per month or 9% Per Year.