The payment of income tax is required to be made on an estimated basis during the financial year itself. The legal provisions of payment of the advance tax are mandatory in case the tax payable is more than Rs. 10,000/- in a financial year. Non Payment of Advance tax may impose additional Interest on Income Tax at Time of Income Tax Return FIling
Advance tax is tax payable by individuals/LLP/Company or any other entities who have sources of income other than their salary. This is applicable to rent, capital gains from shares, fixed deposits, lottery winnings, etc. It can be paid online or through certain banks.
Advance tax is also known as ‘Pay as you earn’ scheme. The tax is payable if your tax liability exceeds Rs.10,000 in a financial year. The tax should be paid in the same year in which the income was received.
The eligibility criteria you will have to fulfil in order to pay advance tax are:
Installment Date | Amount Payable |
|---|---|
On or before 15th June | 15% |
On or before 15th September | 45% |
On or before 15th December | 75% |
On or before 15th March | 100% of tax liability |
Installment Date | Amount Payable |
|---|---|
On or before 15 June | 15% of the Advance Tax |
On or before 15 September | 45% of the Advance Tax |
On or before 15 December | 75% of the Advance Tax |
On or before 15 March | 100% of the Advance Tax |
If advance tax paid by you is less than 90% of the assessed tax, then you will be charged an interest of 1% every month under Section 234B of the Income Tax Act. The interest is computed as 1% interest on the defaulted amount for every month until the tax is paid off completely. The same interest penalty will be applicable if you don’t pay by the second or third deadline.
Under Section 234C of the Income Tax Act, if you do not pay your advance tax installment on time, then you will be charged an interest rate of 1%.
At the end of the year, if the Income Tax Department finds out that you have paid more tax than you should have paid, then it will refund the excess amount. Taxpayers can claim refund by filling and submitting Form 30. They have to make the claim within a period of one year from the last year of the assessment year.
If you are accruing income in excess of Rs.10,000 will be required to pay advance tax.
In case you miss the deadline of paying your fourth installment on 15 March, you can make the payment by 31 March.
If the advance tax paid is more than the total tax liability, the extra amount will be refunded. If the advance amount is more than 10% of the tax liability, then an interest of 6% p.a. will be paid by the IT Department.
Yes, any tax paid till 31 March will be considered as Advance Tax payment.
