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CA Intermediate · Taxation · Tax Deduction or Collection at Source and Advance Tax

Anand Textiles, an assessee not opting for presumptive taxation, estimates its tax liability for tax year 2026-27 at Rs 2,40,000. TDS of Rs 40,000 is expected to be deducted from its receipts. By 15 June 2026 the firm has paid the first instalment of advance tax in full as required. What additional advance tax must it pay by 15 September 2026 to meet the instalment due on that date?

The firm must pay Rs 60,000 by 15 September. Advance tax is the liability net of TDS, which is Rs 2,00,000. Cumulative 45% is Rs 90,000, and since Rs 30,000 was already paid by 15 June, the balance due is Rs 60,000.

  1. ARs 60,000Correct
  2. BRs 90,000
  3. CRs 1,08,000
  4. DRs 70,000

Explanation

Advance tax payable = 2,40,000 - 40,000 = Rs 2,00,000. Cumulative due by 15 June is 15% = Rs 30,000, and by 15 September is 45% = Rs 90,000. The additional payment on 15 September is 90,000 - 30,000 = Rs 60,000. Rs 90,000 is the cumulative figure, not the instalment, and Rs 1,08,000 wrongly applies 45% to the gross liability.

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