The income tax department has issued a reminder to all taxpayers to promptly pay the first instalment of their advance tax. Taxpayers are required to pay 15% of their estimated tax liability for FY 2023-24 by June 15, 2023.
What is Advance Tax?
Advance tax is the tax you pay in advance as and when you earn the income. It is paid in instalments according to specific due dates rather than as a single lump sum payment. Advance tax payments ensure a steady stream of income for the government and also alleviate the burden of paying taxes in a single lump sum for individuals and businesses. Correctly estimating income and making timely payments are crucial to avoid interest charges and penalties.
You receive income from various sources during the year like Salary income, Income from House Property, Capital Gains, Business Income or any other source. The government will tax you on these incomes and collect it either in the form of Advance Tax, TDS or self-assessment tax at the time of return filing.
Both individuals and businesses are expected to pay income tax in advance through periodic instalments rather than waiting until the end of the year to make a lump sum payment. This requirement applies to all taxpayers, including salaried individuals, freelancers, and businesses, whose total tax liability for a financial year amounts to ₹10,000 or more.
However, senior citizens aged 60 years or above who do not have any business income are not required to pay advance tax.
For individuals under the presumptive taxation scheme (sections 44AD and 44ADA), the entire advance tax amount must be paid in one instalment latest by March 31st.
Due dates for advance tax payments
|15% of advance tax
|45% of advance tax minus advance tax already paid
|75% of advance tax minus advance tax already paid
|100% of advance tax minus advance tax already paid
How to pay advance tax?
Refer to this detailed step-by-step guide for making advance tax payment online.
What happens if you fail to pay advance tax?
Failure to pay advance tax or late payment will result in interest charges under sections 234B and 234C of the Income Tax Act, 1961. Timely payments are crucial to avoid penalties.
For any clarifications/feedback on the topic, please contact the writer at email@example.com
Pursuing CA alongside my passion for content writing. Here, I ship some interesting content your way on topics- tax, personal finance and the likes .
Find my peace and energy in exploring culinary arts, anything fitness, post-card worthy places, books, indie music and more.