Payment of advance tax is an obligation as per the Income Tax Act, of 1961. But for some taxpayers especially those receiving salary from an employer it is confused with the term Anticipatory Income tax. The provisions of Advance tax are provided under Section 208 where the tax payable is to be submitted before the actual lapse of the financial year. But in the case of Anticipatory tax calculation, there is no such requirement for estimation and payment.
There is a lot more to know about – How the Anticipatory Income tax calculation is done? and What is the use of an Anticipatory Income tax statement?
What is Anticipatory Income Tax Statement?
Section 192 of the Income Tax Act, 1961 governs for deduction of TDS from the employee income by the company or the employer after doing tax calculations from the employee income and investment details available. The process becomes too hectic when done for 1000 employees or more. To simplify this work, the concept of an Anticipatory Income Tax Statement was bought.
With the Anticipatory Income tax Statement, the employee shall be responsible for submitting a statement of his income, investments made and the estimated Income tax payable within the applicable financial year. There is no particular format provided by the tax department for the creation of such a statement and different employers or employees can design a format of the Anticipatory Tax statement as per their will. Such a statement can be either formed for the current financial year or for the subsequent financial year.
TDS Deduction with Anticipatory Tax Statement
The Anticipatory Income Tax Statement simplifies the calculation of the deduction of TDS deduction of an employee in a particular financial year by its employer. The employer who is responsible for the deduction of TDS from the Income of the employee is required to submit it to the department with filing the TDS Statement.
The Anticipatory tax statement gives an estimate of the Income of the employee on which the TDS will be deducted and submitted to the tax department. Also, it assures timely submission of Advance tax payments, TDS Return submission, and generation of TDS certificates for the employee.
In case, there are some changes or a lower amount of tax is payable by the employee after submission of the Anticipatory statement, then the excess amount payable can be claimed by filing the tax return by the employee.
Format of Anticipatory Income Tax Statement 2023
There is no particular format for the creation of an Anticipatory Income Tax statement. Also, there are no specific rules guiding the creation of such a statement, as it can be considered a tool to simplify tax reporting and submission by both the employer and employee.
For the creation of an Anticipatory Income tax statement, a draft of it can be created with similar heads to those provided under Form 16 including :
- Income from Salary
- Exemptions and Deductions
- Net Salary Income
- Other Income
- Tax Payable on Income
- TDS Deductible
- Tax Already Deducted
- Amount of Tax to be deducted Monthly.
For bigger organizations, the format for the creation of this statement is provided annually on their official website or is provided by the company itself to its employees for reporting.
Submission of Anticipatory Income Tax Statement
By an Individual, an Income tax statement is submitted annually to the tax department at the beginning of the Assessment year. It is a mandatory requirement for the companies which are required to submit their TDS statements to the department to receive the Anticipatory Income tax statement before the due date of filing the TDS statement and the due date for payment of advance tax.
Employees can submit the Anticipatory Income tax statement in advance for the coming financial year and in case some changes are to be made, a revised Anticipatory Income tax statement can be filed before filing of TDS statement by the employer to the department.
Benefits of Submission of Anticipatory Income Tax Statement
Within the reporting provisions, the statement holds several linked benefits including :
- Reduces the last-minute rush stress on the employer for computation of TDS and submission of TDS statements.
- Provides an assessment to the employee on his salary income and the deductions claimable during the year.
- Results in the generation of accurate Form 16, which is required for multiple facilities by an employee including taking loans and managing expenses.
- Helps in record keeping of Salary receipts during the year.
An Anticipatory Income tax statement is not a legal obligation to the employer or the employee. While many big organizations are following the concept of creation of this statement as it builds accuracy and saves time for both the employer and the employee going into later disruptions of tax calculations and wrong monthly deductions or tax submissions.
Is it mandatory to file an Anticipatory Income Tax Statement Online?
No, there is no such mandate from the Income tax department for the submission of an Anticipatory Tax Statement.
To whom it is necessary to furnish an Anticipatory Income tax statement?
It is to be submitted to the employer before the provided due date by the employer.
What is the penalty for non-submission of an Anticipatory Tax statement?
The penalty for non-submission of an Anticipatory Income tax statement can be decided internally within clauses by the employer and the employee.
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