As they say, nothing in life is certain except for death and taxes. But when it comes to taxes, you can at least plan ahead with advance tax payment.
Advance tax is the tax payable for the income earned in the same fiscal year. You have to clear advance tax liabilities in instalments, and this is fairly simple.
Under the pay-as-you-earn (advance tax) scheme, you don’t have to pay a lump-sum amount at the end of every financial year. You make EMI-like payments throughout the year as per the advance income tax payment due dates specified by the Income Tax Department.
If you’re a senior citizen above 60 years without a business/professional income source, you won’t have to pay advance tax. However, as a regular salaried or self-employed individual, you’ll qualify for advance tax payments if:
Coming to advance tax payment due dates, you can follow the table below and complete your payments on time.
Payment Due Date
On or before 15th of July
15% of your liability
On or before 15th of September
45% of your liability
On or before 15th of December
75% of your liability
On or before 15th of March
100% of your liability
However, if you’re a professional or business owner covered under the presumptive tax regime (Section 44AD/44ADA), you have to clear your entire advance tax liability in one go, on/before 15th March.
Advance tax calculation is quite simple. You can calculate income tax advance tax payments using the following steps:
For example, your estimated income for the financial year 2022-23 is Rs. 12,50,000, including salary and interest income. Using an income tax calculator, your tax liability is calculated at Rs. 1,27,500. You need to pay advance tax in four instalments on or before 15th June, 15th September, 15th December, and 15th March. The payments are Rs. 19,125, Rs. 57,375, Rs. 38,250, and Rs. 12,875, respectively. By making these payments, you can fulfil his advance tax liability.
Once you’ve estimated your tax liabilities, you can complete your advance income tax payment online using the following steps:
If you’re not comfortable paying advance tax online, you can always choose an offline method. Download Challan 280 from the official website and submit the filled Challan at an IT Department-authorised bank branch.
Now that you’re well-versed in the nitty-gritty of advance tax payments, you can complete your tax payments before the penalty rate gets added. Moreover, calculating your advance tax can help fine-tune your investment strategy.
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Advance tax payments are made in instalments throughout the year. The due dates for the instalments are 15th July, 15th September, 15th December, and 15th March. However, assessees under the presumptive regime don’t have to follow this division and have to pay all their dues by 15th March.
While you can pay advance tax after the due date, you will be charged a penalty of 1% interest on the outstanding liability for each month it remains unpaid.
As per the IT Department, if you’re not covered under the presumptive tax regime, you will have to pay 15% of this estimate by 15th July, 45% by 15th September, 75% by 15th December, and 100% by 15th March.
To pay advance tax in India, estimate your income for the year and calculate your tax liability. Determine the due dates for advance tax payments, which are on or before 15th June, 15th September, 15th December, and 15th March. Make the payment either online or offline and keep the receipt. If you fail to pay on time, you may be liable to pay interest under the Income Tax Act, 1961.
Yes, a salaried person in India is required to pay advance tax if their tax liability for the financial year is Rs. 10,000 or more.