Advance Tax

Advance tax is the income tax  payable if your tax liability is more than INR 10,000 in a financial year in respect of the total income of the assessee

Advance tax is paid as you earn income, advance tax is also known as pay as you earn Scheme.

Both Advance tax and Tax Deducted at Source (TDS) is different.

In case of salaried employee tax deducted from their salaries, by the employer, normally salaried person is not required to pay any advance tax and

 In case of senior citizen of the age of 60 years or more having income from the head “profit or Gains of Business or Profession “are not required to pay advance tax.

In case of assessee who has opted for presumptive scheme under section 44AD or 44ADA is not exempted from the payment of advance tax related to such business or professional income they are required to pay advance tax of the whole amount in one installment on or before the 15th March of financial year.

Due Dates for Payment of Payment Tax

Advance tax is payable in installments by specified due dates which are indicated as under:

Due dates for payment of Advance Tax Advance Tax Installment    
By 15th June 15% of estimated tax liability
By 15th September 30% of estimated tax liability
By 15th December 30% of estimated tax liability
By 15th March 25% of estimated tax liability
By 15th March Tax on capital gain or casual income arising after 15th March, if any
By 15th March Tax on income of the assesses who has opted under section 44AD OR 44ADA  

Now question arises Where to deposit Advance Tax ?

Advance Tax Installment should be deposited alongwith  challan  No. 280 in the Govt. Treasury (RBI) or any of the authorized branches of nationalized banks.

Interest for Non/Short/Deferment of payment of Advance Tax

Interest is payable at the prescribed rates in terms of Section 234C of the Income Tax Act ,1961


Let for example

Estimated Tax Liability Means:

All Income                                    XXXX

Less: Deduction u/s 80              (XXX)

Income after Deduction            XXXX

Tax on above                                XXXX

Less: TDS                                         (XXX)

Advance Tax Liability                  XXXX

*For 1st installment even if amount paid is 12%  of estimated tax liability there is no violation under Income Tax Act.

* For 2nd installment even if amount paid is 36% of estimated tax liability therr is no violation under Income Tax Act

Tax on Income from Capital Gain/Lottery Income and Unusual income has to be deposited on the due date just after the date on which such income arises.

For Example – if capital gain has been made on 16th September, than deposit on 15th December 75% of Tax Liability.

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