HNIs get a nudge from taxman to pay advance tax before March 15

NEW DELHI: High net worth individuals (HNIs) who paid taxes based on self assessment last year have been getting notices from the taxman.
The authorities want them to pay advance tax before March 15 to ensure that, with collections flagging, revenue targets can be met as much as possible before the financial year winds to a close.

The income tax department has issued notices raising tax demands in some cases while in others it’s a reminder about the obligation to pay advance tax, said two persons aware of the development.

Advance tax is paid in four installments—in June, September, December and March— and is adjusted against the final liability computed at the end of the year. Some HNIs defer such payments and pay them later.

But the authorities want to ensure that they discharge their liabilities well in time. The notices have been issued under the Section 210 of the Income Tax Act, which relates to asking individuals to pay advance tax if they are liable. In some cases, income tax officers have also raised tax demands under Section 156 through Form 28A.

Experts said taxpayers need to be mindful about responding to these notices in time. “If you do not respond to these notices and pay tax within 30 days then you could be treated as assessee in default,” said Kuldip Kumar, partner, Pricewaterhouse-Coopers.

In past years, the usual practice has been to restrict the insistence on advance tax to companies, particularly public sector units, in the March quarter. Any excess tax would be refunded in the next financial year.

The income tax authorities are using multiple data sources to seek out information on individuals and are, therefore, hoping that the exercise will be fruitful. HNIs with a substantially high self-assessment tax payment last year figure in that list.

The apex direct taxes body, the Central Board of Direct Taxes, is keeping a close watch on collections. The budget estimate for direct taxes is Rs 7.36 lakh crore for the current financial year, a growth of 16% over the previous fiscal, but collections have grown only by 11.38% in the April-January period.