What is Provisional Tax? How is Provisional Tax calculated?
Provisional Tax is the amount of tax that must be paid under the tax law. It is calculated by extrapolating the amount of tax payable for a 12-month period from the taxpayer's income in the previous year of assessment. For example, if this year's year of assessment is 2022/23, the amount of Provisional Tax is based on 2023/24.
In the next year of assessment, the tax for that year will be reduced by the amount of provisional tax paid. If there is a surplus, it will be carried forward or refunded to you in the next year of assessment. However, for first-time taxpayers, due to the lack of experience in paying provisional tax, it is easy for people to overlook the existence of provisional tax, which will affect their budget planning. Therefore, when you pay provisional tax, you can simply calculate the amount of tax payable.
To make it easier for you to view and understand what the provisional tax is? How is it calculated? We have made a video:
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