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Advance Tax Payment


Advance Tax Payment – Section 208 of Income Tax

Any person having an estimated tax liability of Rs.10,000 or more in a year is required to pay advance tax to the government. This payment of tax in advance and in instalments is, however, not required for taxpayers who are senior citizens and not having any income from a business. Section 208 of the Income Tax Act deals with advance tax payment and Section 234C of the Income Tax Act deals with delay in remitting advance tax payment. In this article, we look at the due date and procedure for making advance tax payment in India.

Who Should Remit Advance Tax Payment?

Under Section 208 of the Income Tax Act, any person (Individual/Company/LLP/Partnership Firm/Trust) whose estimated income tax liability for the year exceeds Rs.10,000 will be required to remit advance tax payment. Only a Senior Citizen (an individual over 60 years of age) not having income from business or profession is exempted from making advance tax payment.

Due Date for Advance Tax Payment

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.

Calculating Advance Tax Payable

Advance tax payment would have to be made by the taxpayer as per the due dates mentioned above or due to an order passed by an Assessing Officer. To pay advance tax, the taxpayer must first estimate the amount of tax payable during the year and calculate the advance tax payable for the relevant quarter.

Self-Assessment & Payment of Advance Tax

All taxpayers having an estimated tax liability of over Rs.10,000 must first estimate current income and calculate the advance tax payable. Tax can be computed on the current income (estimated by the taxpayer) at the rates in force during the financial year. From the tax so computed, tax deducted or collected at source will be deducted and the balance tax payable will be used to compute the advance tax liability. Also, relief of tax allowed under section 90 or section 90A or any deduction under section 91 or any tax credit allowed to be set off as per section 115JAA or section 115JD shall also be deducted while computing the advance tax liability.

For example, if a taxpayer has an estimated tax liability of Rs.1 lakh after considering all eligible deductions and TDS deductions, then the advance tax payment due would be as follows:

On or before 15th June – Rs. 15,000

On or before 15th September – Rs. 45,000

On or before 15th December – Rs. 75,000

On or before 15th March – Rs.1,00,000

Taxpayers making an advance tax payment by themselves without receiving any income tax notice from an Assessing Officer is not required to submit an estimate or statement of income to the tax authorities. Further, after making payment of first or second or third instalment of advance tax, if there is a change in the tax liability, then the taxpayer can revise the quantum of advance tax in the remaining instalment(s) and pay the tax as per revised estimates.

Assessment by Income Tax Officer

In case a taxpayer fails to remit the advance tax or pays advance tax lower than the required amount and has already been assessed by way of regular assessment in respect of the total income of any previous year, then the Assessing Officer can pass an order under section 210(3) requiring him to pay advance tax on his current year’s income (specifying the amount of instalments in which tax should be paid).

All orders under Section 210(3) for advance tax payment should be sent before the last day of February. On receipt of the order to pay advance tax, if the taxpayer’s estimate is lower than the estimate of the Assessing Officer, then the taxpayer can submit his own estimate of current income/advance tax and pay tax accordingly. In such a case, intimation must be sent in Form No. 28A to the Assessing Officer. A copy of Form 28A is reproduced below for reference:

Form No.28A – Advance Tax Payment

In case the tax liability estimated by the taxpayer is higher or same as the assessment of the tax officer, then the taxpayer can remit the amount of advance tax due without submitting any intimation.

Remitting Advance Tax Payment

Corporate taxpayers (Private Limited Company, One Person Company and Public Company) and taxpayers who are required to get their account audited must pay advance tax payment through internet banking facility. A taxpayer who does not fall under any of the above two categories and salary taxpayers can pay tax through internet banking or by depositing payment with challan at an authorised bank.

Advance Tax Payment Challan

Advance tax payment challan is reproduced below for reference:

Advance Tax Payment Challan