CMA Intermediate · Direct and Indirect Taxation · Advance Tax
Meenakshi Traders Ltd estimates its current income for the tax year at Rs 40,00,000 and calculates income-tax on it at Rs 10,00,000 at the rates in force. Tax deductible at source on income that is included in the estimate, before any deduction, and which has been received after deduction of tax, is Rs 1,60,000. Advance tax payable on its own accord is:
Advance tax payable is Rs 8,40,000. Under section 405, advance tax equals income-tax on the specified sum less tax deductible at source on income included in the estimate and received after deduction, so Rs 10,00,000 minus Rs 1,60,000 gives Rs 8,40,000.
- ARs 10,00,000
- BRs 8,40,000Correct
- CRs 11,60,000
- DRs 1,60,000
Explanation
Under section 405, A = B - C. B = Rs 10,00,000 and C = Rs 1,60,000, so A = Rs 8,40,000. Ignoring TDS gives Rs 10,00,000, and adding TDS is a sign error.
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