Only two days are left to pay the third instalment of your advance tax as the deadline is December 15. It's imperative to note that even salaried individuals, often accustomed to tax deductions at source (TDS), might fall under the purview of advance tax.
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Under the Income Tax Act of 1961, anyone with an estimated tax liability of ₹10,000 or more for the financial year must calculate their tax payable after accounting for tax deducted or collected at source. Failure to meet the quarterly instalments leads to penalties.
It is paid in four instalments.
The deadlines are: 15% by June 15; 45% by September 14; 75% by December 15; and the total 100% by March 15 of the financial year.
| Due Date | Advance tax payment percentage |
|---|---|
| On or before June 15 | 15% of advance tax |
| On or before September 15 | 45% of advance tax (-) advance tax already paid |
| On or before December 15 | 75% of advance tax (-) advance tax already paid |
| On or before March 15 | 100% of advance tax (-) advance tax already paid |
Non-payment of advance tax attracts interest at a rate of 1% per month for the shortfall, while any underpayment as per scheduled instalments also incurs the same penalty.
Kumarmanglam Vijay, Partner and Head of Practice for Direct Tax at JSA Advocates & Solicitors, emphasises key strategies to potentially lessen the burden of advance tax obligations:
Senior citizen exemption
Senior citizens aged 60 or above, devoid of income from business or profession, are exempt from advance tax liabilities.
Presumptive taxation scheme
Any person opting for a presumptive taxation scheme (except Section 44AE) is not required to pay advance tax in four instalments but can pay the whole amount of advance tax on or before March 15 of the financial year.
Interest exemptions
Interest on shortfall on payment of advance tax instalment is not levied where such shortfall in tax is due to under-estimation or failure to estimate:
1. Capital gains.
2. Winnings from lotteries, games, etc.
3. Dividend income.
4. Business income accruing for the first time, and the amount of tax payable on such income has been paid by March 31 of the financial year.
(Edited by : Shoma Bhattacharjee)
First Published: Dec 12, 2023 6:09 PM IST
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