The income of a non-resident Indian in India in most cases is subject either to tax at source or payment of advance tax. Income by way of dividends, interest, winnings from lottery and other sums payable to non-resident Indians are subject to deduction of tax at source. Another method by which income tax payable by a non-resident Indian is collected in advance of the regular assessment is payment of advance tax. Advance tax is payable by the non-resident Indian in respect of his total income. Advance tax is payable in a financial year and is treated as a payment of tax in respect of the income of the previous year for an assessment year immediately following the financial year in which it was payable. Credit for such advance tax is given to the non-resident Indian in the regular assessment. A non-resident Indian who has been previously assessed by way of regular assessment is required to pay advance tax. Where the total income of the non-resident Indian taxable in India does not exceed Rs. 5,00,000, during the financial year 2019- 2020 he is not required to pay any advance tax. Further, where the tax payable on the basis of the total income as reduced by the income tax deductible at source exceeds Rs. 10,000 the non-resident Indian would be required to pay advance tax.
Where advance tax is payable, the assessee shall himself compute the advance tax payable on his current income at the rate in force in the financial year and deposit the same whether or not he has been earlier assessed. He need not file any estimate. The Assessing Officer can also serve an order for enhanced tax based on the total income of the latest previous year for which the assessment has been made or the returned income in the latest return, whichever is higher. In such a case also the assessee shall have the right to file his own estimate for advance tax and pay tax accordingly. He may submit a revised estimate of advance tax to reduce the amount determined by the Assessing Officer. The assessee is also entitled to revise the instalment of advance tax according to his estimate of current income without the requirement of filing a revised estimate of advance tax.
Under Section 211, up to 30%, 60%, and 100% of the advance tax payable shall be paid by 15 September, 15 December, and 15 March respectively. Any payment for advance tax before 31 March will be treated as advance tax. For companies, 15%, 45%, 75% and 100% of the advance tax shall be payable by 15 June, 15 September, 15 December and 15 March.
The provisions for interest are now contained in Sections 234B and 243C. The rate of interest under Section 234B for default in payment of advance tax is 1% p.m. for the period starting from 1 April of the following financial year to the date of regular assessment on the assessed tax less advance tax, if the advance tax paid falls short of 90% of the assessed tax. Under Section 234C, the rate of interest is 1% per month in case of deferment of instalments of advance tax or at 1% on the shortfall in the payment of tax till 15 March.
The Finance Act, 2003 has, w.e.f. 1.6.2003 inserted a new Section 234D to charge simple interest on excess refund granted at the time of summary assessment at the rate of one-half per unit p.m. for the months comprised in the period from the date of grant of refund to the date of the regular assessment.
As per Section 40(a) disallowance in respect of payments like rent, commission, interest, etc. will not be made in the case of the deductor for the expenditure even if payments are made by the last date of filing the income-tax return.