Section 7A of CPS Act : Section 7A: Advance Payment Of Surtax

Explanation using Example

Let's say XYZ Pvt. Ltd. is a manufacturing company that has been in business for several years. For the financial year 2023-2024, the company estimates that its chargeable profits will exceed the statutory deduction, resulting in a "chargeable amount" that is subject to surtax.

According to Section 7A of The Companies (Profits) Surtax Act, 1964, XYZ Pvt. Ltd. is required to pay advance surtax on this chargeable amount. The company's finance department calculates the advance surtax based on the chargeable amount from the latest previous year for which they have been assessed, which, for example, was the financial year 2022-2023.

The company must pay the surtax in three equal instalments. Since XYZ Pvt. Ltd.’s financial year ends on December 31st, the payment dates will be June 15th, September 15th, and December 15th. If XYZ Pvt. Ltd. had a financial year ending after December 31st, the instalment dates would be September 15th, December 15th, and March 15th.

Before the first instalment is due, XYZ Pvt. Ltd. sends a statement to the Assessing Officer detailing the advance surtax payable, computed as per the Act's provisions. The company then pays the calculated surtax amount in equal instalments on the specified dates. If XYZ Pvt. Ltd. had not been assessed before, they would submit an estimate of the current chargeable amount and the surtax payable, then pay in instalments or in one sum if only the last date remained.