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All that you need to know...


Frequently Asked Questions

What are the provisions of advance tax in India?

In India, advance tax refers to the activity of paying a portion of your taxes before the financial year ends. According to Section 208 of the Income Tax 1961, every individual whose estimated income tax liability for a given financial year is Rs 10,000 or more should pay his or her tax in advance, hence the term ‘advance tax ‘pay-as-you-earn’ scheme. The payment of the advance tax must be made in the financial year in which the taxpayer receives the income.

The primary benefit of paying advance tax is that you do not have to pay the whole tax at one go, once the financial year ends. The payment of advance tax is to be made in four installments within the stipulated due dates of advance tax payment.

Accordingly, taxpayers are expected to pay at least 15% of their income tax liability on or before 15th June, 45% by 15th September, not less than 75% by 15th December, and the total tax liability calculated by 15th March of each financial year. Depending upon the changing income estimates, the advance tax payable may reduce or increase as the installments progress.

Payment of Advance Tax for Self-Employed and Business Owners

Due Date Amount payable
Before September 15 >= 30% of total advance tax liability
Before December 15 >= 60% of total advance tax liability
Before 15th March 100% of total advance tax liability

Payment of Advance Tax for Organisations

Due Date Amount payable
Before 15th June >=15% of total advance tax liability
Before September 15 >=45% of total advance tax liability
Before December 15 >=75% of total advance tax liability
Before 15th March 100% of total advance tax liability

Payment of Advance Tax for Salaried

In the case of salaried individuals, there is no need for them to pay advance tax, as it is their employer’s responsibility to deduct tax at source (or TDS). Payment of advance tax is applicable in cases wherein an individual has other sources of income, apart from a fixed salary. Thus, incomes earned from sources such as capital gains on shares, lottery winnings, interest on fixed deposits, capital gains on house property, or salaried income are subject to advance tax payment after adjusting for any expenses or losses.

You must consider here that while your employer may deduct TDS on your salary, the advance tax is paid on income which is not subject to TDS.

How to File Advance Tax?

To pay advance tax, individual taxpayers may use tax payment challans at any of the authorized bank branches or pay online through the National Securities Depository or the Income Tax department. Alternatively, taxpayers can also pay advance tax with the Reserve Bank of India

In case you miss the deadline or pay less than the mandatory percentage of the advance tax, you would have to pay an additional amount as interest. This interst amount is calculated at 1% per month simple interest (for three months) on the defaulted amount. Moreover, the same interest penalty would be applicable if you miss out on the second consecutive deadline. In case you continue to miss out on the payment of advance tax on or before the final deadline (i.e., 15th March), you would have to pay 1% simple interest for every month until you fully pay the tax.

If you end up paying a higher advance tax, you wwould be eligible to receive a refund of the excess amount along with an interest amount calculated at 6% per annum (if the excess amount is more than 10% of the total tax liability.)