Pay your first advance tax instalment by June 15 to avoid penalty.
The Income Tax Act requires people to pay taxes in advance if their tax liability is expected to be Rs 10,000 or more in a financial year. According to the tax rules, a person must pay a minimum of 15 per cent of the total estimated tax in advance or the first instalment by June 15.
The subsequent deadlines for the second, third, and fourth instalments are September 15, December 15, and March 15 of the financial year. The minimum payment requirement for advance tax on these dates is 45 per cent, 75 per cent, and 100 per cent, respectively.
What Is Advance Tax?
Advance tax is the tax you pay in advance from a projected taxable amount in a financial year. As per section 208 of the Income Tax Act, “every person whose estimated tax liability for the year is Rs 10,000 or more shall pay his tax in advance, in the form of advance tax.”
If you are a salaried person and do not have other income sources, you may not be required to pay it because your employer deducts the tax component on your salary and deposits it to the tax department. But if you have income other than salary, you must pay advance tax. This applies to various categories of people, including individuals, Hindu Undivided Families (HUFs), freelancers, professionals, and businesses.
Penalty:
If one fails to pay the specified percentage of the advance tax, one is liable to pay a penalty interest of one per cent per month or part of the month on the outstanding amount (tax amount not paid). The penalty is simple interest and applies to the short payment amount and the non-paid instalment amount of the tax. The tax is calculated from the due date to the actual payment date.
How To Pay Advance Tax?
One can go to the bank if it is an authorised bank, such as Axis Bank, Bank of Baroda, HDFC Bank, Federal Bank, Punjab National Bank, ICICI Bank, and State Bank of India which accept tax payments. Alternatively, one can pay online on the income tax department website.
Who Is Not Liable To Pay?
As per the income tax act, if taxpayers opt for the presumptive taxation scheme of section 44AD, they are not required to pay advance tax every quarter. Instead, they are liable to pay the entire advance tax for the year on or before March 15 of the financial year.
Also, a resident senior citizen does not need to pay advance tax if there is no income from a business or profession. So, if you are a taxpayer, calculate your tax amount and pay it before
June 15 to avoid the last-minute rush, technical glitches if paying online, and, most importantly, the penalty