Income Tax Department on June 14, 2024, reminded that the first instalment of advance tax should be paid by tomorrow, i.e., June 15, 2024. The I-T Department took to social media platform X saying, "Kind Attention Taxpayers! Advance Tax is to be paid in four instalments in a Financial Year. Please check the due dates & plan your payments accordingly. Don’t forget to pay your first instalment of Advance Tax by June 15, 2024."
Advance Tax
An advance tax scheme is a system wherein every assessee pays their income tax in advance instalments throughout the financial year if their total tax liability exceeds Rs 10,000. The assessee has to calculate their tax liability by deducting tax deducted or collected at source and pay it in instalments rather than as a lump sum at the end so that the government receives a steady flow of tax income.
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Senior citizens (aged 60 years or above) who do not have any income from a business or profession are exempt from paying advance tax. Presumptive income for businesses–The taxpayers who have opted for the presumptive taxation scheme under section 44AD have to pay the whole amount of their advance tax in one instalment on or before 15th March. They also have the option to pay all of their tax dues by 31st March.
As much as 15 per cent of advance tax should be paid by June 15 of every financial year, 45 per cent of tax liability by September 15, 75 per cent by December 15, and the entire tax sum by March 15, 2024.
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Who Must Pay Advance Tax?
Every income taxpayer with an estimated tax liability exceeding Rs 10,000 after accounting for tax deducted at source (TDS) is required to pay advance tax. This income includes earnings from various sources, such as businesses, professions, short-term and long-term capital gains, or even crypto profits. However, senior citizens above 60 years old, if they have no income from business are exempt from paying advance tax.
For independent professionals like doctors, lawyers, architects, etc., or businesses that have opted for a presumptive income scheme under section 44ADA, the rule is different. They must pay their entire advance tax by March 15, of every financial year.
How To Calculate Advance Tax & Consequences If You Miss Payment
Advance tax depends on your total tax liability which in turn depends on your tax regime. From financial year 2023-24, the new tax regime is the default option.
One can specifically opt for the old tax regime if deductions are in their favour especially if total deductions exceed Rs 1.5 lakh.
Calculate your total income in the concerned financial year from various sources including salary, capital gains, rental income, interest on fixed deposits etc. Then, deduct applicable deductions under sections 80C, 80D etc and compute the tax payable based on their tax slab rates. Then subtract any Tax Deducted at Source (TDS) to arrive at tax liability and if it exceeds 10,000, you must pay 15 per cent of total tax liability by tomorrow.
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If you don't pay the installments by the deadline interest will be levied under Sections 234B and 234C of the Income Tax Act. Under section 234, interest shall be levied at 1 per cent per month on the unpaid amount of instalment. Interest penalty under Section 234B comes into effect only after March 31 of every financial year. The interest charged is 1 per cent on the unpaid amount if 90 per cent of the total tax liability is paid.
How to Pay Advance Tax?
To pay your advance tax online, visit the e-filing portal of the Income Tax Department of India and click on 'e-Pay Tax' under 'Quick Links.'
The mobile number connected to the portal will receive an OTP now. Enter the OTP received on your mobile, select Continue, and choose 'Income Tax,' from the next window.
Click on proceed, select the ‘Assessment Year’ as 2025-26 and ‘Type of Payment’ as ‘Advance Tax (100)’.
Now enter your tax details such as tax amount, surcharge, cess, interest, penalty etc.
Preview and pay the advance tax, and save the challan serial number and copy of the receipt for your tax return.
If you opt for the offline method, download Challan 280 from the IT Department website, fill it out, and submit it along with the tax instalment amount to an authorized bank.
