The Dilemma – Payment of Advance Tax -15^th June or 30^th June? 

15^th June or 30^th June now?

The first installment of advance tax payment normally falls due on 15^th June. However, n view of the spread of pandemic COVED-19 across many countries of the world including India, causing immense loss to the lives of people, Government has issued The Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020 has relaxed the due date of all the compliance falling due between 20^th March 2020 & 29^th June 2020 to 30^th  June 2020.

The question arises, whether for the FY 2020-21, the date for payment of first installment of advance tax now will be 15^th June 2020 or 30^th June 2020? It may be noted that the delay in payment of advance tax even by a single day attract the interest of 3% (i.e., though the interest is 1% per month the interest is levied for 3 months. Illogical it may sound, but the fact is that even the delay of a single day would result in levy of interest of 3%). In short, one has to be very careful while making a payment of advance tax.

Before coming to the conclusions, it may be noted that the Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020 in Chapter II, Section 3 reads as under:

CHAPTER II

RELAXATION OF CERTAIN PROVISIONS OF SPECIFIED ACT

Relaxation of certain provisions of specified Act.

3. (1) Where, anytime limit has been specified in, or prescribed or notified under, the specified Act which falls during the period from the 20th day of March, 2020 to the 29th day of June, 2020 or such other date after the 29th day of June, 2020 as the Central Government may, by notification, specify in this behalf, for the completion or compliance of such action as‑

(a) completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by whatever name called, by any authority, commission or tribunal, by whatever name called, under the provisions of the specified Act; or

(b) filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record, by whatever name called, under the provisions of the specified Act; or

(c) in case where the specified Act is the Income-tax Act, 1961,‑

(i) making of investment, deposit, payment, acquisition, purchase, construction or such other action, by whatever name called, for the purposes of claiming any deduction, exemption or allowance under the provisions contained in‑

(I) sections 54 to 54GB or under any provisions of Chapter VI-A under the heading “B.—Deductions in respect of certain payments” thereof; or

(II) such other provisions of that Act, subject to fulfilment of such conditions, as the Central Government may, by notification, specify; or

(ii) beginning of manufacture or production of articles or things or providing any services referred to in section 10AA of that Act, in a case where the letter of approval, required to be issued in accordance with the provisions of the Special . Economic Zones Act, 2005, has been issued on or before the 31st day of March, 2020,

and where completion or compliance of such action has not been made within such time, then, the time limit for completion or compliance of such action shall, notwithstanding anything contained in the specified Act, stand extended to the 30th day of June, 2020, or such other date after the 30th day of June, 2020, as the Central Government may, by notification, specify in this behalf:

Provided that the Central Government may specify different dates for completion or compliance of different actions.

Provided further that such action shall not include payment of any amount as is referred to in sub-section (2).

 (2) Where any due date has been specified in, or prescribed or notified under, the specified Act for payment of any amount towards tax or levy, by whatever name called, which falls during the period from the 20^th day of March, 2020 to the 29^th day of June, 2020 or such other date after the 29th day of June, 2020 as the Central Government may, by notification, specify in this behalf, and such amount has not been paid within such date, but has been paid on or before the 30th day of June, 2020, or such other date after the 30th day of June, 2020 as the Central Government may, by notification, specify in this behalf, then, notwithstanding anything contained in the specified Act,‑

(a) the rate of interest payable, if any, in respect of such amount for the period of delay shall not exceed three-fourth per cent for every month or part thereof;

(b) no penalty shall be levied and no prosecution shall be sanctioned in respect of such amount for the period of delay.

Explanation – For the purposes of this sub-section, “the period of delay” means the period between the due date and the date on which the amount has been paid.

Apparently, an analysis of above fact signifies that there is a blanket extension of all the dates to 30^th June. But, this is not completely true. It may be that

1. Where there is a compliance with the notices, submissions, etc are concerned, the date is extended invariably to 30^th June without any penal compliances.
2. Where the payment of tax is involved, then also the date is extended to 30^th June subject to the condition that the delay would attract the interest @ 0.75% as against the normal applicable interest rate.  It may be recalled here that the due date for payment of TDS was 30^th April only and the delay in payment of advance tax has also attracted interest.

To conclude, if the payment is not done by 15^th June, interest will be leviable at 2.25% (as against 3% otherwise applicable) for the shortfall of this first installment of advance tax by 15^th June. Considering the present status of the economy and difficulty involved in the estimation and payment thereof, it would be better if the Government suitably extends & merge the due date of payment of first installment of advance tax with the 2^nd installment.