PAYMENT OF TAX BEFORE ASSESSMENT

Worked Example I
X Ltd's assessment for the assessment year 2015-2016 was completed at
income of Tk. 400,000. The company's Return for the assessment year 2016-17
showing income at Tk. 600,000 remains pending. Is the company liable to pay
advance tax in respect of the assessment year 2017-18?
Answer
Since the company's latest assessment for the assessment year 2015-16 did not
exceed Tk. 400,000. The company is not liable to pay any advance tax in respect
of the assessment year 2017-18.
Worked Example- 2
M Ltd's assessment for the assessment year 2015-16 was completed showing
income of Tk. 500,000 on 16.09.15. The company's assessment for the
assessment year 2016-17 was completed showing income of Tk. 600,000 on 15 th
May 2016. Determine the amount of income on which the company is liable for
payment of advance tax for the assessment year 2017-18.
Answer
Although latest assessment was completed for the assessment year 2016-17, but
the date of completion was not before 15 lh May 2016 of the income year. Hence,
the company should pay advance tax based on the total income Tk. 500,000 for
the assessment year 20017-18 to comply with the legal provision.
Worked Example -3
Miami Ltd's latest assessment was completed at Tk. 900,000 for the assessment
year 2015-16 on 22.08.15. The company estimates that its income for the year
ending 31st December, 2016 would be less than the previous year's income.
Suggest the way on what income the company should pay advance tax for its
income relating to the year ending 31st December, 2016?
Answer
The company can estimate its income for this year and pay advance tax on the
basis of such income by sending estimates to the Deputy Commissioner of Taxes.
The company should take precaution so that advance taxes paid do not fall short
of the 75 percent of the tax demand determined as per assessment to avoid levy
of simple interest u/s 73.

Worked Example -4

Z Ltd, a newly formed company has never been previously assessed. Is the
company liable to pay advance tax for the assessment year 2017-18?
Answer
If the company estimates that its total income is likely to exceed Tk. 400,000
during this income year, the company is required to pay advance tax in one
installment on 15th June 2017 by sending an estimate of its total income to the
Deputy Commissioner of Taxes.
Worked Example -5
XYZ Ltd., a tea company, whose income was determined at Tk. 600,000 for the
assessment year 2016-17. Is the company is required to pay advance tax in
respect of the assessment year 2017-18?
Answer
A tea company's 40% income is business and 60% income is agricultural under
Rule 31. No advance tax is payable on agricultural income. Since business
income of the tea company is Tk. 240,000 (40%), the company is not liable to
pay advance tax for the assessment year 2017-18.