CMA Intermediate · Direct and Indirect Taxation · Advance Tax
Ravi Menon, a Pune consultant, estimates that the income-tax on his current income for the year will be Rs 48,000. Tax of Rs 39,000 will be deducted at source on income included in that estimate. Under the conditions for advance tax liability, what advance tax is he liable to pay for the year?
He has no advance tax liability. Advance tax payable is the tax on estimated income minus TDS on that income, which is 48,000 minus 39,000, or Rs 9,000. Since this is below the Rs 10,000 threshold, no advance tax is payable for the year.
- ANil, because advance tax payable of Rs 9,000 is below Rs 10,000Correct
- BRs 9,000
- CRs 39,000
- DRs 48,000
Explanation
Advance tax payable is tax on the specified sum less TDS on income taken into account: 48,000 - 39,000 = 9,000. Advance tax is payable only where the amount computed is Rs 10,000 or more, so Rs 9,000 means no liability. Rs 48,000 wrongly ignores the TDS deduction.
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