FAQs on Advance Tax

22 Jun, 2023

1. What is an Advance tax?

Ans. Advance tax is the tax which is paid in advance before completion of the financial year. The Indian Govt. has made a mechanism through which the assessed need not pay the amount of total tax in one go if the amount of tax exceeds the prescribed limit.

2. Who should pay the advance tax?

Ans. Any person having a salary, business income, and his expected total income tax liability after TDS is Rs.10,000/- or more. However, the provision of the tax is not applicable to the senior citizen (60 years or older) and do not have any business income.

Further, any person who has opted the presumptive taxation scheme u/s 44AD is liable to pay the whole amount of advance tax before 15^th march of the previous year, However, if the taxpayer did not pay the tax amount before 15^th march of the previous year then penalty u/s 234C shall also be levied.

Note: – Any amount paid as an Income tax before 31^st March shall be considered as an Tax.

Profit and gain of business or profession XXX
Income from other sources XXX
Gross Total Income XXX
Less:- Deduction u/s 80C(NSC & Tuition Fee) XXX
Total Income (i.e. Taxable Income)(A) XXX
Tax on (A) XXX
Less:- Rebate u/s 87A ( lower of 100% of tax OrRs.2500) XXX
Tax Liability after rebate u/s 87A XXX
Add:- Education Cess @ 2% XXX
Add:- SHEC@1% XXX
Tax Liability before TDS XXX
Less:- TDS Deducted XXX
Tax Liability after TDS XXX

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Due Date of the advance Tax under income Tax act 1961

For individual and corporate taxpayers

Due Date	Advance tax to be paid
On or before 15^th June	15% of the Tax liability after TDS
On or before 15^th Sept	45% of the Tax Liability after TDS
On or before 15^thDec	75% of the Tax Liability after TDS
On or before 15^thMarch	100% of the Tax Liability after TDS

For the person who has opted presumptive taxation scheme-44AD

Any person who has opted presumptive taxation scheme shall liable to pay their tax liability by the end of 31^st March of each financial year.

For the person who has opted presumptive taxation scheme-44AE

Due Date	Advance tax to be paid
On or before 15^th June	15% of the Tax liability after TDS
On or before 15^th Sept	45% of the Tax Liability after TDS
On or before 15^th Dec	75% of the Tax Liability after TDS
On or before 15^th March	100% of the Tax Liability after TDS

Interest on late payment of Advance Tax

If the amount of advance tax is not paid/partially not paid on the due date of tax as above mentioned then interest shall also be levied on such remaining amount u/s 234C and 234B of the income tax act 1961.

Interest u/s 234C:- Interest @1% p.m. shall be levied if the tax is not paid as per the above-mentioned date i.e. Deferment of installment of Advance Tax.

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Interest u/s 234B:- Interest @1% shall be paid if the 90% of the tax is not paid before the end of the financial year i.e Default in payment of Tax.

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