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

Ms. Kavya Reddy estimates her total tax liability for tax year 2026-27 at ₹1,20,000. Tax of ₹30,000 will be deducted at source during the year. She paid ₹13,500 as advance tax on 15 June 2026. Assuming she is not under the presumptive scheme, how much must she pay as advance tax on or before 15 September 2026 so that her cumulative payment meets the instalment requirement?

She must pay ₹27,000 by 15 September 2026. Advance tax is based on liability net of TDS, which is ₹90,000. Forty-five percent cumulative is ₹40,500, and deducting the ₹13,500 paid in June leaves ₹27,000 for the September instalment.

  1. A₹13,500
  2. B₹27,000Correct
  3. C₹40,500
  4. D₹54,000

Explanation

Advance tax is computed on tax payable net of TDS: ₹1,20,000 − ₹30,000 = ₹90,000. Cumulative requirement by 15 September is 45% × ₹90,000 = ₹40,500. Less ₹13,500 already paid gives ₹27,000. ₹54,000 wrongly uses the gross liability of ₹1,20,000 (45%) and ignores the June payment, while ₹40,500 ignores the June payment.

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