FAQS on Advance Payment System (APS)

 

  1. What is Advance Payment System (APS)?
  2. Who is Liable to APS?
  3. As from when is APS Applicable?
  4. What is an APS Quarter?
  5. How to calculate the chargeable income of an APS Quarter?
  6. How is Tax Calculated for an APS Quarter?
  7. Should all Companies file an APS Statement?
  8. Should a company having paid tax under APS file its Annual Return?
  9. Is there any penalty for late payment of tax under APS?

  1. What is Advance Payment System (APS)?

    APS is a system whereby every company is required to file quarterly APS Statements and to pay tax, if any, in accordance thereof.

     

  2. Who is Liable to APS?

    APS is applicable to companies, unit trust schemes, collective investment schemes, trusts (other than trusts having made a declaration of non-residence), non resident sociétés and any société holding a Category 1 Global Business Licence which has opted to be liable to income tax.

     

  3. As from when is APS Applicable?

    Companies whose turnover in respect of the Year of Assessment 2008/2009 exceeds Rs100 million should file quarterly APS Statement and pay tax in accordance thereof as from 1 July 2008. All other companies would be subject to APS Statement as from 1 July 2009.

     

  4. What is an APS Quarter?

    The APS quarter of a company depends on its accounting year and is given in the table below:

    Quarter Income for period

     

    APS Quarter Income For Period
    First 3 months commencing on the first day of the accounting year
    Second 3 months immediately following the end of the first quarter
    Third 3 months immediately following the end of the second quarter

     

  5. How to calculate the chargeable income of an APS Quarter?

    The chargeable income of a company in respect of an APS quarter may, at the option of the company, be computed in accordance with either Method A or Method B if applicable:

    Method A: The chargeable income is deemed to be 25% of the chargeable income of the company for the accounting year ending on the date immediately preceding the commencement of that quarter.

     

    Method B: The chargeable income is the difference between the gross income and the allowable deductions for that quarter including any loss brought forward from the previous quarter of the accounting year immediately preceding that quarter. Where the company opts for Method B and the calculated value is negative, the value should be entered as zero. The company will then deduct that loss in the APS Statement of the next quarter of the accounting year.

     

  6. How is Tax Calculated for an APS Quarter?

    The income tax payable in respect of an APS Quarter is calculated, at the option of the company, at the rate of :

    (i) 15% on the chargeable income arrived at under either Method A or Method B; or

    (ii) 25% of the tax paid as Alternative Minimum Tax (AMT) in respect of the preceding accounting year.

    The amount of TDS to which the company has been subject in respect of payments received during the current quarter should be deducted from the tax payable for that quarter.

     

  7. Should all Companies file an APS Statement?

    All companies that had a chargeable income or paid tax under "Alternative Minimum Tax" (AMT) in respect of the preceding accounting year should file an APS Statement.

    Companies that had tax losses carried forward in respect of the preceding year and did not pay tax under AMT in respect of that year of assessment may opt not to file an APS Statement.

     

  8. Should a company having paid tax under APS file its Annual Return?

    Tax paid under APS is a provisional payment. Any company having paid tax under APS should file its annual return and pay any tax payable in accordance with the return, after deducting any tax already paid under APS or withheld under the Tax Deduction at Source.

     

  9. Is there any penalty for late payment of tax under APS?

    Yes, in case of late payment of tax under APS, a penalty of 5% and interest at the rate of 1% per month or part of the month during which the tax remains unpaid will become due.

 

Go Top