Sec 80 – Payment of tax and other amount in instalments

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Sec 80 – Payment of tax and other amount in instalments 2017-04-14T11:26:46+00:00

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  • Ashish BadalaCA Ashish Badala
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    #1401 |

    On an application filed by a taxable person, the Commissioner may, for reasons to be recorded in writing, extend the time for payment or allow payment of any amount due under this Act, other than the amount due as per the liability self-assessed in any return, by such person in monthly instalments not exceeding twenty four, subject to payment of interest under section 50 and subject to such conditions and limitations as may be prescribed:
    Provided that where there is default in payment of any one instalment on its due date, the whole outstanding balance payable on such date shall become due and payable forthwith and shall, without any further notice being served on the person, be liable for recovery.

    Priya MadrechaPriya Madrecha
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    80.1 Introduction
    This section permits a taxable person to make payment of an amount due on installment basis, other than the amount due as per self-assessed return. The term ‘installments’ in general parlance would mean equated periodical payments (money due) spread over an agreed period of time. This provision happens to be beneficial piece of law to the tax payers to pay the demand in installments along with interest.
    80.2 Analysis
    (i)    This section empowers the Commissioner to grant permission only to the taxable person to make payment of any amount due on instalment basis, on an application in writing.
    (ii)    The Commissioner would either extend the time or allow payment of any amount due under the Act on instalment basis for reasons to be recorded in writing.
    (iii)    This section applies to amounts due other than the self-assessed liability shown in any return.
    (iv)    The instalment period shall not exceed 24 months.
    (v)    The taxable person shall also be liable to pay prescribed interest on the amount due from the first day such tax was due to be payable till the date tax is paid.
    (vi)    If default occurs in payment of any one instalment the taxable person would be required to pay the whole outstanding balance payable on such date of default itself without further notice.
    80.3    Comparative review
    These provisions are broadly similar to the provisions contained in existing KVAT Rules (Rule 53 of the KVAT rules, 2005). However, KVAT law specifies the time frame for interest payments to be the period upto the month the last instalment is due. Further, the above provision is replicated in the GST act, from the KVAT law. In Central Indirect Taxes, it was allowed by the Department in exceptional cases although express provisions were not there.
    80.4    Related provisions
    Section     Description
    50     Interest on delayed payment of tax
    80.5    FAQs
    Q1. Whether application is to be made to pay the amount due in installments?
    Ans. Yes, an application should be made by a taxable person to the commissioner stating the reasons for his/her request to make payment through installments.
    Q2. Can an unregistered person be covered under the said provisions?
    Ans. A taxable person is covered by the provision, While Section 2(107) defines taxable person as “a person who is registered or liable to be registered under Section 22 or Section 24. Hence unregistered person cannot opt the benefit of this provision.
    Q3.    From which date does the interest liability arise.
    The interest is liable to be paid from the date on which the said amount of tax became due to be paid till the actual payment of tax i.e., last instalment.
    Example: ‘A’ requested the Commissioner to provide the benefit to pay ` 5,00,000/- under installments. Commissioner directs ‘A’ to make the payment in five monthly installments. How to pay the interest?
    Ans. It is assumed that the actual date on which the tax was required to be paid as
    06.06.2015. Benefit of instalment was granted by Commissioner on 25.06.2016 to be paid w.e.f 02.06.2016 onwards over 5 installments
    Payment date     Interest to be paid as per section 45 – No of days     Amount on which
    interest to be paid
    1st Instalment – 02.06.2016     06.06.2015 to 01.06.2016 =
    361 days     ` 1,00,000/-
    2nd Instalment – 02.07.2016     06.06.2015 to 01.07.2016 =
    391 days     ` 1,00,000/-
    3rd Instalment – 02.08.2016     06.06.2015 to 01.08.2016 =
    422 days     ` 1,00,000/-
    4th Instalment – 02.09.2016     06.06.2015 to 01.09.2016 =
    453 days     ` 1,00,000/-
    5th Instalment – 02.10.2016     06.06.2015 to 01.10.2016 =
    483 days     ` 1,00,000/-
    Q3. What will happen if the taxable person fails to pay any one instalment on its due date?
    Ans. In such a case, the entire outstanding balance payable as on the said due date                    shall forthwith become due and payable without any further notice and be liable for recovery.
    80.6 MCQ
    Q1. The following amounts due cannot be paid through installments,
    (a)    Self-assessed tax shown in return
    (b)    Arrears of tax
    (c)    Short paid tax for which notice has been issued
    (d)    Concealed liability
    Ans.  (a) Self-assessed tax shown in return
    Q2. Maximum number of installments permissible under section 55
    (a)    36
    (b)    12
    (c)    48
    (d)    24
    Ans.  (d) 24
    Q3. Which officer/s has the power to grant permission for payment of tax through instalment?
    (a)    Commissioner
    (b)    Assistant Commissioner
    (c)    Chief Commissioner
    (d)    both (a) and (b) Ans.  (d) Commissioner

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