- office@finactservices.com
- +91 8793030545Understand the Advance Tax:
Advance tax means income tax should be paid in advance instead of lump sum payment at year end. It is also known as pay as you earn tax. At the beginning of the year, you should ideally estimate your total income for the year, especially if you are a businessman or professional. As per section 208, 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”. However, a resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession is not liable to pay advance tax.
“For individuals with salary as the sole income, advance tax is taken care of by the employer who deducts tax at source at the time of crediting salary,”
Due Date for payment of Advance Tax for the Financial Year 2018 –19.
Advance tax is to be paid in different installments throughout the year. The due dates for payment of different installments of advance tax are as follows:
| Status | By 15th June | By 15th Sept. | By 15th Dec. | By 15th March |
| All assessees (other than the eligible assessee as referred to in Section 44AD or section 44ADA i:e presumptive Taxation) | Up to 15% of total tax assessed. | Up to 45% of total tax assessed. | Up to 75% of total tax assessed. | Up to 100% of total tax assessed. |
| Taxpayers who opted for presumptive taxation scheme of section 44AD or section 44ADA | NIL | NIL | NIL | 100% of tax liability assessed |
Note 1: Any tax paid till 31st March will be treated as advance tax. 2: If the last day for payment of any installment of advance tax is a day on which the banks are closed, then the taxpayer should pay the advance tax on the immediately following working day [Circular No. 676, dated 14-1-1994].
Mode of payment:
As per Rule 125 of the Income-tax Rules, 1962 all assessee shall pay taxes through the electronic payment mode using the internet banking facility of the authorized banks through challan no. ITNS 280.
Tax can be computed on the current income (estimated by the taxpayer) at the rates in force during the financial year. From the tax so computed, tax deducted or collected at source will be deducted and the balance tax payable will be used to compute the advance tax liability. Also, relief of tax allowed under section 90 or section 90A or any deduction under section 91 or any tax credit allowed to be set off as per section 115JAA or section 115JD shall also be deducted while computing the advance tax liability.
Non paying advance tax can attract an interest under section 234C:
Simple interest @ 1% per month is applicable if fail to pay the advance tax on due date. Calculated from the individual cut off dates shown bellow, till the date of actual payment of outstanding taxes.
Calculation of Interest under section 234C (In case of a Tax Payer other than opting for presumptive income u/s 44AD)
| Particulars | Rate of Interest | Period of Interest | Amount on which Interest is calculated |
| If Advance Tax paid on or before June 15 is less than 15% of the Amount* | Simple interest @1% per month | 3 months | 15% of Amount* (-)tax already deposited before June 15 |
| If Advance Tax paid on or before September 15 is less than 45% of the Amount* | Simple interest @1% per month | 3 months | 45% of Amount* (-) tax already deposited before September 15 |
| If Advance Tax paid on or before December 15 is less than 75% of the Amount* | Simple interest @1% per month | 3 months | 75% of Amount* (-) tax already deposited before December 15 |
| If Advance Tax paid on or before March 15 is less than 100% of the Amount* | Simple interest @1% per month | – | 100% of Amount* (-) tax already deposited before March 15 |
“If advance tax paid is less than 90% of the assessed tax, then assessee shall be liable to pay interest under section 234B at the rate of 1% per month from the beginning of the assessment year till the payment thereof,”.