CMA Intermediate · Direct and Indirect Taxation · Advance Tax
Meera Industries Ltd estimates that income-tax on its current income for the tax year will be Rs 2,60,000. Tax of Rs 45,000 will be deducted at source from receipts that are included in this estimate and are paid after deduction. What is the advance tax payable for the year?
The advance tax payable is Rs 2,15,000. It is calculated as income-tax on the estimated current income, Rs 2,60,000, reduced by the tax deductible at source on income included in that estimate, Rs 45,000. The TDS is subtracted, not added.
- ARs 2,15,000Correct
- BRs 3,05,000
- CRs 45,000
- DRs 2,60,000
Explanation
Advance tax A = B - C. B is the tax on the estimated current income, Rs 2,60,000. C is the TDS on income included in the estimate, Rs 45,000. So A = 2,60,000 - 45,000 = 2,15,000. Adding the TDS (Rs 3,05,000) reverses the sign.
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