Advance payment of tax
Pucki
(Querist) 11 March 2012
This query is : Resolved
Certain issues are disputed with Income Tax authorities, which is common wth every year return. Therefore is it wise to pay advance tax at higher rate - assuming issues in favour of IT department? Also if such issues are decided in our favour at ITAT , then in this case should one pay tax according at higher side or at lower (i.e as per income claimed to be assessed in the return)??
C. P. CHUGH
(Expert) 12 March 2012
Dear Pucki,
When you are aware that certain issues are disputed and has been decided against you and demands have been raised against you which you have contested in Appeals, It would be better to deposit advance tax considering such disallowances in the current year also. This would save you from addittional demands. More over in case your appeals failing, you would be liable for interest on addittional demands also and that too could be high. In case you succeeding in Appeals, your excess tax paid is liable to be refunded with interest.
Hence there is no loss in making extra advance tax deposits, if liquidity and finances allows.
Guest
(Expert) 13 March 2012
In disputed matters with the IT Department, it is always wise to pay advance tax at higher rate and claim adjustment/refund later, rather than becoming a defaulter. Bad reputation with any Government department, more particularly the Taxation department, is always harmful.
