Evolution and Implications of Advance Tax Instalment Provisions : Clause 408 of the Income Tax Bill, 2025 Vs. Section 211 of the Income-tax Act, 1961

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....broader framework of tax collection, aiming to minimize tax evasion and reduce the burden of lump-sum payments at the end of the financial year. This commentary provides a comprehensive analysis of Clause 408, explores its legislative intent, scrutinizes its provisions, and compares it meticulously with the existing Section 211. It further discusses the practical implications for stakeholders and highlights any areas of ambiguity or potential reform. Objective and Purpose The primary objective of both Clause 408 and Section 211 is to ensure the timely collection of taxes by requiring assessees to pay tax in advance, based on their estimated current income for the year. This system is designed to: * Facilitate regular revenue flow to th....

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.... the amount, if any, paid in the earlier instalment 3 On or before 15th December Not less than 75% of such advance tax, as reduced by the amount or amounts, if any, paid in the earlier instalment or instalments 4 On or before 15th March The whole amount of such advance tax, as reduced by the amount or amounts, if any, paid in the earlier instalment or instalments This structure ensures a progressive accumulation of advance tax liability, culminating in the full payment by 15th March of the tax year. Sub-section (2): Special Provision for Certain Assessees Clause 408(2) carves out an exception for assessees who declare profits and gains in accordance with section 58(2) (Table: Sl. No. 1 or 3). For these taxpayers, the entire a....

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....erpretation * Reference to Section 405 and Section 58(2): The cross-referencing to other sections (especially in sub-section (2)) necessitates careful coordination with those provisions to avoid interpretational disputes. * Definition of "Current Income": The method of computation, while referenced to section 405, may still pose practical challenges for taxpayers with fluctuating or uncertain incomes. * Non-compliance Consequences: While Clause 408 sets the schedule, it does not detail the consequences of non-payment or shortfall, which are presumably addressed elsewhere in the Bill. Practical Implications For Taxpayers * Compliance Burden: Taxpayers must accurately estimate and pay advance tax at specified intervals, necessitatin....

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....dvance tax liability, adjusting for amounts already paid. * Provide for a special regime for certain assessees (presumptive taxpayers), requiring full payment by 15th March. * Recognize payments made up to 31st March as advance tax for the relevant year. Key Differences and Evolution * Reference to Computation Sections: * Clause 408 references section 405 for computation of current income, whereas Section 211 references section 209. The substance of these computation sections must be compared to assess if there is any substantive shift in the method of estimating advance tax liability. * Terminology and Scope: * Clause 408 uses the term "tax year," whereas Section 211 refers to "financial year." This may reflect a terminologica....

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....nflict * Cross-referencing and Harmonization: The effectiveness of Clause 408 will depend on the precise alignment of referenced sections (e.g., section 405 and section 58(2)) with their counterparts in the current Act. Any substantive change in these cross-referenced sections could impact the practical operation of advance tax obligations. * Omission of Demand Notice Provisions: The absence of an explicit provision akin to Section 211(2) in Clause 408 raises questions about the handling of advance tax demands arising from assessment orders or revised computations. This may require clarification in the Bill or through subordinate legislation. * Terminological Shifts: The move from "financial year" to "tax year" may have downstream imp....