Advance Tax Due Dates

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Advance Tax Due Dates

Advance tax is a type of tax collection mechanism under which a taxpayer makes an advance payment of tax based on the estimated income for the current financial year. By implementing advance tax payments, the Government collects income tax throughout the year in instalments rather than in one payment at the end of the year. Hence, advance tax is also known as the ‘pay-as-you-earn’ scheme. In this article, we discuss the concept of advance tax and also mention the due dates for advance tax payment.

Applicability of Advance Tax

Advance tax is applicable to all taxpayers whose income tax payable is more than Rs. 10,000. Hence, advance tax requirements are applicable for salaried employees, professionals, freelancers or businessmen. Advance tax is normally not required for salaried employees if the employer deducts tax at source or TDS. However, if the employee has additional sources of income on which TDS has not been deducted, then the taxpayer faces the need for advance tax payments on the estimated total income. Examples of such additional income could include capital gains on shares or house property, interest on investments, and so on.

Advance Tax Due Dates

Advance Tax is paid for the financial year of the income tax and it is calculated under two sections: Section 234B and Section 234C.

Section 234B

Under Section 234B, if the tax is more than Rs. 10,000, then the taxpayer has to pay 90% of the amount before the 31st of March.

Section 234C

Under this section 234C, the tax has to be paid in four divisions. The due date for advance payment of tax is as follows:

Taxpayer Type By 15th June By 15th September By 15th December By 15th March
All types of taxpayers (other than those who opted for presumptive taxation scheme) Upto 15% of advance tax Upto 45% of advance tax Upto 75% of advance tax  Upto 100% of advance tax
 Taxpayers who opted for the presumptive taxation scheme  NIL  NIL  NIL Upto 100% of advance tax

Any tax paid by a taxpayer till 31st March will be treated as advance tax. If the last day for payment of any instalment of advance tax is a day on which the banks are closed, then the taxpayer should pay the advance tax on the immediately following working day. If a taxpayer fails to pay the advance tax as per the schedule above, it becomes necessary to be levied 1% interest to every per cent of the amount that has to be paid in that time period.

Know the procedure for making advance tax payment.

Calculation of Interest

The interest for Section 234C is levied on the taxpayers if the instalment paid for the tax is less than the required amount. The interests can be calculated under two schemes. They are:

For taxpayers under presumptive taxation scheme (Section 44AD)

Interest will be levied if the Advance Tax paid on or before 15th March is less than 100% of the required sum.

For any other taxpayer

For other taxpayers, the interest is calculated according to the following methodology:

  • If the taxpayer pays the Advance Tax on or before 15th June, the applicable interest rate shall be less than 12%
  • If the taxpayer pays the Advance Tax on or before 15th September, the applicable interest rate shall be less than 36%
  • If the taxpayer pays the Advance Tax on or before 15th December, the applicable interest rate shall be less than 75%
  • If the taxpayer pays the Advance Tax on or before 15th March, the applicable interest rate shall be less than 100%

Know more about the penalty for not paying advance tax.

Post by Bennisha

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