Only nine days are left to pay the third instalment of advance tax as the deadline is December 15. Failure to meet this deadline may incur penalties as per the tax regulations. Often, tax deductions occur at the source (TDS) when income is disbursed, but it's crucial to note that even salaried individuals might fall under the purview of advance tax payments.
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Understanding advance tax
The tax paid within the same financial year in which the income is earned is called advance tax. 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 respective 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 |
Who must pay?
Those with a tax liability exceeding ₹10,000 after considering TDS, encompassing individuals with incomes beyond salary, such as rental earnings, capital gains, lottery winnings, etc., are obligated to fulfil advance tax payments.
Who is exempted from paying this?
Resident senior citizens (an individual of the age of 60 years or above) not having any income from business or profession are not liable to pay advance tax.
Salaried persons who don’t have any income other than salary also need not pay advance tax instalments as employers deduct the applicable tax from the monthly salary.
What is the mode of payment?
E-payment is mandatory for all corporates and also those assessees whose accounts are required to be audited under Section 44AB of the Income Tax Act, 1961.
Section 44AB of the Income Tax Act contains provisions pertaining to the tax audit under the Income Tax Audit. A tax audit is an examination of a taxpayer's books of accounts. E-payment is convenient for other taxpayers also as it ensures correct credit
How to pay advance tax online?
Step 1: Visit the e-filing portal of the Income Tax Department of India
Step 2: On the left side of the home page, there is a 'Quick Links' section, click on the 'e-Pay Tax' option. Users can also search for 'e-Pay Tax' in the search bar.
(Source: Cleartax)
Step 3: On this page, enter the PAN and re-enter to confirm it. Then, enter the mobile number and click on ‘Continue’.
Step 4: Now enter the 6-digit OTP received on the mobile number and 'Continue'.
Step 5: Select the first box labelled as ‘Income Tax’ and click on ‘Proceed’. Select the ‘Assessment Year’ as 2024-25 and ‘Type of Payment’ as ‘Advance Tax (100)’ and click on 'Continue'.
(Source: Cleartax)
Step 6: Enter all the tax details, select the payment method and the bank and press 'Continue'.
Step 7: Preview the challan details and click on ‘Pay Now’. Users may also ‘Edit’ these details if required.
Step 8: After completing the payment, users will get an acknowledgement on the next screen.
What is the penalty for not paying advance tax?
Any shortfall or default in paying any of the instalments of advance tax will add an interest burden for the taxpayer.
Section 234C imposes an interest of 1% on the shortfall in the instalment amount for each month of delay in payment. On the total tax, there is a margin of up to 10% allowed. This means if taxpayers pay less than 90% of the assessed tax within the deadline, then section 234B requires the taxpayer to pay 1% interest for each month in the assessment year when the shortfall and delay continue.
| Particulars | Rate of Interest | Period of Interest | Amount on which interest is calculated |
| If advance tax paid by June 15 is less than 15% | 1% per month | 3 months | 15% of Amount (-) tax paid before June 15 |
| If advance tax paid by September 15 is less than 45% | 1% per month | 3 months | 45% of Amount (-) tax paid before September 15 |
| If advance tax paid by December 15 is less than 75% | 1% per month | 3 months | 75% of Amount (-) tax paid before December 15 |
| If advance tax paid by March 15 is less than 100% | 1% per month | 1 month | 100% of Amount (-) tax paid before March 15 |
(Source: Cleartax)
(Edited by : Amrita)
First Published: Dec 7, 2023 3:07 PM IST
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