Advance Tax

Advance Tax is a part of total tax liability of a taxpayer, which he/she pays to be before the end of relevant financial year. Payment is to done online on e-filing portal of Income Tax.

Income Tax authorities regulates the due dates and percentage of total tax liability payable as advance tax.

Who should pay advance Tax?

Salaried Individuals, freelancers, businesses: All taxpayers whether salaried individuals, freelancers or businesses required to deposit advance tax if their total tax liability for the year is INR 10,000 or more.

Senior Citizens – Assessee aged 60 years or more (not running business) are exempt from payment of advance tax.

Due dates for payment of Advance Tax for individuals and corporates

Due Date (of respective financial year)	Percentage up to due date
By 15th June	15% of total tax
By 15th September	45% of total Tax
By 15th December	75% of total tax
By 15th March	100% of total tax

Notes:

1. Please note it is cumulative percentage, hence tax already paid in earlier installments is deductible for calculation of tax payable.
2. TDS paid is also deductible while calculating tax payable.

Due date for taxpayers who opt for Presumptive Taxation Scheme under section 44AD or 44ADA

Due Date (of respective financial year)	Percentage up to due date
By 15th March	100% of total tax

What are the consequences for non-payment or delayed payment of advance tax?

Interest is chargeable under section 234B and 234B, If a taxpayer defaults in or delays the payment:

1. Interest on non-payment of advance tax under section 234B: If up to 90% of total tax liability is not paid before 31^st March of respective financial year, then interest @1% per month on unpaid amount payable.

Note: Interest u/s 234B charged if advance tax paid is 90% o the total tax liability.

• Interest on delayed payment of advance tax under section 234C: If taxpayer delays in making payment, then interest of 1% per month on unpaid amount is charged.

Note: If the tax paid in the first, second, third, and fourth installments exceeds 12%, 36%, 75% and 100% respectively, no interest under section 234C is charged

Step by Step process to calculate advance tax payable:

1. Calculate estimated income for the full financial year, including all sources i.e. capital gain, rental income, interest income, salary income and any other income
2. Deduct the eligible deductions from estimated total income calculated in step 1
3. Compute the tax liability as per applicable rate/slab rate on the taxable income, as calculated in step 2.
4. Calculate the proportionate tax liability up to the due date (i.e. 15%/45%/75%/100% w.r.t. 1^st/2^nd/3^rd/4^th installment respectively).
5. Subtract Tax paid earlier (including TDS/TCS) for the respective financial year, from tax liability calculated in step 4.

You can use the calculator at Income Tax (India) website, to calculate your tax liability.

We at Onlinecorpserv.com can help you guide applicability, amount payable and process of payment. Please feel free to discuss with us and take free consultation in this regard. We are happy to help you.