Advance Tax

As the name suggests, it refers to paying a part of your yearly taxes in advance. Advance tax is the income tax payable if your tax liability exceeds Rs 10,000 in a financial year. Advance tax should be paid in the year in which the income is received. Hence, it is also known as the 'pay-as-you-earn' scheme.

Advance tax is applicable when an individual has sources of income other than his/her salary.

Any rebate due fetches you an interest of 0.5 percent every month, or, six percent annually, as in the case of an income tax refund. However, if you don’t pay the advance tax on time, you’ll be charged one percent every month, or, 12 percent a year.

Who should file it?

If you are salaried, you need not pay advance tax as your employer deducts tax at source (TDS). However, you still need to file it if you have other sources of income, increasing your liability to more than Rs 10,000. Professionals (self-employed) and businessmen will have to pay taxes in advance as, given their business income, the liability can be huge. The same goes for companies and corporates.

When to file advance tax?

1.On or before 15th June15%

2.On or before 15th September45%

3.On or before 15th December75%

4.On or before 15th March100%

Due DateAdvance Tax Payable

On or before 15th June15% of advance tax

On or before 15th September45% of advance tax less advance tax already paid

On or before 15th December75% of advance tax less advance tax already paid

On or before 15th March100% of advance tax less advance tax already paid

For taxpayers who have opted for Presumptive Taxation Scheme under section 44AD & 44ADA – Business Income

On or before 15th March100% of advance tax

If you miss the deadline ?

1. Interest under section 234C – Interest @ 1% per month is payable if the tax is not paid as per the above schedule i.e. for Deferment in instalment of Advance Tax


2. Interest under section 234B – Interest @ 1% is payable if 90% of the tax is not paid before the end of the financial year i.e. for Default in Payment of Advance Tax







 
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