Are you having questions pertaining to Advance Tax?
Do you want to have clarity about Advance Tax?
Do you want to know what Advance Tax is?
How to Calculate Advance Tax?
What is the Advance Tax Due Date?
Such questions often bother taxpayers.
Well, Advance Tax is a vital element in the overall tax scenario in India.
In fact, ignorance of Advance Tax regulations can be costly to you.
So, to help out our readers, we have come up with this post featuring detailed information about Advance Tax.
Here, you will get to know everything related to Advance Tax.
It’s a post that talks about Advance Tax & Due Date.
So, let’s begin and get to know all about Advance Tax.
What is Advance Tax?
If you look closely, you will find that the term Advance Tax is quite self-explanatory.
Well, let’s have the clarity about Advance Tax.
Actually, Advance Tax is the income tax that has to be paid in advance rather than making lump sum payment at the year-end.
Advance Tax is popularly known as “pay as you earn tax.”
The installments of advance tax have to pay as per the due dates issued by the Income Tax Department of India.
In case the income tax liability of a taxpayer exceeds Rs.10,000 in a financial year, the taxpayer is required to pay such tax in the form of installments during the year itself instead of paying the tax at the end of the year.
This tax that is payable during the year is known as “Advance Tax.”
It is the tax that has to be paid when the income is earned rather than when you pay tax at the end of the year. The Advance Tax is paid in the same year in which the income was received.
It is the tax payable on the total income of the year and includes income earned from different sources such as salary, profession, business, rent, etc. However, it should be remembered that Advance Tax is payable only when the tax liability exceeds Rs.10000 in a financial year.
Advance Tax helps the Government to maintain a constant flow of tax receipts throughout the year so that expenses can be taken care instead of receiving all tax payments at the end of the year.
On the other hand, the taxpayer gets the benefit of paying taxes in installments rather than paying in a lump sum amount at the end of a financial year. So, Advance Tax payments ease the tax liability of assesses.
Who all have to pay Advance Tax?
A salaried individual is not liable to pay advance tax as the employer itself deducts tax at source (TDS). Advance Tax has to be paid by an individual in case he/she has sources of income other than the salary.
Also, a salaried individual having income from other sources is liable to pay advance tax too.
Following is the list of income sources that attract advance tax:
- When an assesse earns income via capital gains on shares.
- Winnings earned from lottery or races.
- Interest earned on fixed deposits.
- Capital gains from house property.
- Rent or income earned from house property.
These are incomes besides the regular business or salaried income. Then after adjusting for expenses or losses, He or She has to pay advance tax.
It should be noted that advance tax is payable on income that is not subject to TDS. So, professionals, as well as business persons, have to pay advance tax.
It is also applicable to companies and corporations, as well.
Advance Tax Exemptions
However, Senior Citizens aged above 60 years who do not own any business are exempted from paying advance tax.
Taxpayers who opt for presumptive schemes are also exempted from advance tax.
Advance Tax Due Date/Schedule
We have listed Advance Tax Schedule for self-employed & business person as well as companies.
Advance Tax Payment Schedule for Professionals (self-employed) and Businessperson
Installment Date – Payable Amount
On or before 15th – September 30% of the Advance tax
On or before 15th – December 60% of the Advance tax
On or before 15th – March 100% of the Advance Tax
Advance Tax Payment Schedule for Companies
Payment Due Date – Amount Payable as Advance Tax
On or before 15th June – 15 percent of the Advance Tax
On or before 15th September – 45 percent of the Advance Tax
On or before 15th December – 75 percent of the Advance Tax
On or before 15th March – 100 percent of the Advance Tax
How to Pay Advance Tax?
One can pay Advance Tax using tax payment challans at bank branches which are authorized by the I-T (Income Tax) Department of India.
The Advance Tax can be deposited with the Reserve Bank of India, State Bank of India, HDFC Bank, ICICI Bank, Axis Bank, Indian Bank, Punjab National Bank, Indian Overseas Bank, as well as other authorized banks.
In fact, there are as much as 926 bank branches that can accept advance tax payments.
Besides depositing Advance Tax at authorized bank branches, individuals can also pay Advance Tax online via the I-T Department or via National Securities Depository.
What happens when you miss the deadline
In case you fail to pay the Advance Tax amount by the due date or if the amount paid is less than the mandated 30 percent of the total liability by 15th September, then you need to pay interest.
It is computed at the rate of 1% simple interest per month on the amount that is defaulted for a period of three months.
The same interest penalty of 1% is applicable if you default by the second deadline of 15th December.
If you forget to pay Advance Tax by the third and final deadline of 15th March, then you have to pay 1 percent simple interest on the defaulted amount for every month till the Advance tax is fully paid up.
Refund of Advance Tax
If you have paid more Advance Tax than you should have paid, the I-T Department will refund the excess amount to you. The refund can be claimed by filing and submitting Form 30.
However, the claim has to be submitted within a period of one year from the last year of the assessment year.
How to Calculate Advance Tax
Below we show the steps that you can follow for calculating Advance Tax:
- Determine your Income (other than your salary)
- Deduct your Expenses from the income
- Total the Income
- Total Advance Tax – if the tax exceeds Rs.10000, then you are liable to pay advance tax.
You can also calculate advance tax by using online calculator offered by I-T Department of India.
You need to visit the link.
Here, you need to submit details of your income.
Then, click on the “Calculate” button.
It is an easy way to calculate Advance Tax.
Online Advance Tax Payment
Income Tax Department offers online facility for paying Advance Tax.
- Go the official Income Tax Department website
You can follow the steps listed on the official webpage of I-T Department.
The link is listed below:
- Select the right Challan for paying your Advance Tax.
- Fill in all the details
- You will then be directed to the bank’s Net Banking Page.
- Next, you will get details of your payment such as the Challan number.
- After making the payment, you have to report your payment. This can be done by adding an additional entry under the paid tax page.
Challan 280: It allows taxpayers to pay advance tax online on the I-T Department (India) website.
Benefits of Advance Tax
- It eases the burden of tax payment. Taxpayers need not worry about money shortage at the last moment.
- It helps to speed up the tax collection process.
- It helps to increase Government Funds.
- It saves taxpayers from defaulting on their tax payments.
- It helps professionals, businesses, and companies in managing their finances.
We hope that the post has given you all the vital information about Advance Tax. If you found the post valuable, don’t forget to share it with your friends and colleagues. We welcome your comments and suggestions.