Advance Tax:
Tax payers whose total income is likely to be chargeable to tax for the assessment year are required to pay tax in advance during the financial year (April 1 to March 31) on their estimated current income, which will be assessable to tax during the next following financial year called assessment year. The current income for this purpose means the total income which will be chargeable to tax in the relevant assessment year.
The advance tax payable is the tax on the current income minus the tax deductible at source or collectible out of any income included in the current income.
Deduction of Tax At Source :
Person responsible for paying any income chargeable to tax under the head 'Salaries' is required to compute the tax liability in respect of such income and deduct tax at source at the time of payment. If the employee has any other income he can inform the employer in which case the employer can take that income into consideration for computing his tax liability. He will not take account of loss except loss from house property.
Those responsible for paying any income by way of interest on securities or any other interest are required to deduct tax at source at the prescribed rates at the time of credit of such income to the account of the payee or at the time of payment thereof by any mode. W.e.f. 01.07.1995 interest on term deposits with banks is also subject to such deduction.
Tax Collection at Source:
In certain cases tax is to be collected at source from the buyer, by the seller at the point of sale. Such tax collection is to be made by the seller at the time of debiting the amount payable if the buyer to the account of the buyer or at the time of receipt such amount from the said buyer, whichever is earlier.
The prescribed list of forms of certificates which to be issued and necessary form filled with assessing officer by the person deducting the tax at source is as follows:
| Categories of Payment | Form No. of the Certificate | Form No. of Return to be filled with the assessing Officer |
| Salaries | 16 | 24 (annual) |
| 21 (monthly) | ||
| Interest on securites (government) | 16A | 25 (annual) |
| Interest on Securities (others) | 16A | 27(in case of interest on securities payable to non-resident) |
| Interest other than interest on Securities | 16A | 26A (annual) |
| 27 A (return of interest payment without tax deductions) | ||
| Dividends | 16A | 26 (annual) |
| 27 (in case of dividend payable to non-resident) | ||
| Winning from Lotteries / Crossword Puzzles | 16A | 26B |
| Winning from Horse Races | 16A | 26BB |
| Payment to Contractors / Sub-contractors | 16A | 26C |
| Insurance commission | 16A | 26D (annual) |
| 26E (where insurance commission paid / credited without tax-deduction) | ||
| Non-resident sportmen or sports association | 16B | 27 |
| National Savings Scheme etc. | 16A | 26F |
| Equity Linked Saving Scheme | 16A | 26G |
| Commission, remuneration or reward on sale of lottery tickets | 16A | 26H |
| Payment to non-resident | 16A | 27 |
| Foreign company being unit holders of mutual fund | 16A | 27 |
| Units held by offshore fund and income from foreign currency bonds | 16A | 27 |
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