From FY 2012-13, you may be paying higher advance tax and even salaried class will be liable to advance tax if the literal meaning of the proposed amendment in section 209 is read. Under the existing provisions of section 209 of the Income-tax Act, the amount of advance tax payable is computed by reducing the amount of income-tax which would be deductible or collectible during the financial year from income-tax on estimated income.
Therefore, in cases where the assessee receives or pays any amount (on which the tax was deductible or collectible) without deduction or collection of tax, it has been held by Courts that he is not liable to pay advance tax to the extent the tax is deductible or collectible from such amount. Consequentially even interest u/s 234B & 234C does not apply. For example , this blog had brought before readers
In order to make an assessee liable for payment of advance tax in respect of income which has been received or paid without deduction or collection of tax,it is proposed to amend the aforesaid section to provide that where a person has received any income without deduction or collection of tax, he shall be liable to pay advance tax in respect of such income.
The amendment will make every one liable to pay more advance tax and consequentially more interest u/s 234B & 234C .Even the salaried class , which was saved from the advance tax on salary may be asked for advance tax on salary and if there is scrutiny of salaried cases and A.O adds any salary on which the employer did not deduct tax at source, the A.O will now charge interest u/s 234B.
This amendment will take effect from the 1st April, 2012 and would, accordingly, apply in relation to advance tax payable for the financial year 2012-13 and subsequent financial years.
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