Guide to .. Tax Management ,Tax Planning and Tax Saving

 

 

Payment of Tax & all Provisions

2.1.      PAYMENT OF TAX

A- When is Tax Payable ? [ Sec. 220(1) ]

Any amount, otherwise than by way of advance tax shall be paid within  30 [thirty] days of the service of the notice of demand. All the assesses who are served with such notices must deposit such amount which is written in the notice and at the place and to the person mentioned in the notice :

But where the Assessing Officer has any reason to believe that it will be detrimental to revenue if the full period of  30 [thirty] days is allowed, he may, with the previous approval of the Joint Commissioner , reduce the number of days which shall be less than 30 days and may be specified by him in the notice of demand.

B- Payment of Interest: [ Sec. 220(2) ]

If the amount specified in any notice of demand is not paid within the specified limit, the assessee shall be liable to pay simple interest at  1% [one] per cent for every month or part of a month.

If due to any reason the amount on which interest was payable under this section had been reduced, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded

C- Extension of Date : [ Sec. 220(3) ]

The Assessing Officer is empowered to extend the date of payment of tax if he is approached  by the assessee with an application before the expiry of the due date, the Assessing Officer may extend the time for payment or allow payment by installments, subject to such conditions as he may think fit to impose in the circumstances of the case. However, interest shall be charged in such a case and it will be calculated from the date specified in the notice of demand.

D- Assessee in Default : [ Sec. 220 (4) ]

The assessee shall be considered to be an Assessee in Default if he fails to pay tax within the time allowed originally or extended and to the person and place mentioned in he notice.  The assessee can not be treated as being in default unless a notice of demand has been duly served.

E- Payment of Tax in Installments: [ Sec. 220 (5) ]

If, in a case where payment by instalments is allowed, the assessee commits defaults in paying any one of the instalments within the time fixed, the assessee shall be deemed to be in default as to the whole of the amount then outstanding, and the other instalment or instalments shall be deemed to have been due on the same date as the instalment actually in default.

F- Penalty Payable when Tax is in Default : [ Sec. 221 ]

When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable, be liable, by way of penalty, to pay such amount as the Assessing Officer may direct , and in the case of a continuing default, such further amount or amounts as the Assessing Officer may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears :

This Section expressly provides that before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard :

Where the Assessing Officer is satisfied that the default was for good and sufficient reasons, no penalty shall be liable under this section.

The assessee shall not cease to be liable to any penalty by reason of the fact that before the levy of such penalty he has paid the tax.

Where as a result of any final order the amount of tax, on which the penalty was levied shall be cancelled and the amount of penalty paid shall be refunded.

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