Every citizen of India is liable to pay tax if his/her income comes under the Income Tax bracket. The government depends mainly on its tax collection to finance its spending throughout the year. This funding is utilized in the development of nation, reforming infrastructure, and the betterment of society, which helps in shaping the economy of the country.
As the name suggests, advance tax is the practice of paying taxes in advance rather than paying a lump sum amount at the end of the financial year. Also known as 'pay as you earn' scheme, these taxes are supposed to be paid in the same year the income is received.
As per Income Tax Act, a taxpayer needs to pay advance tax if his/her tax liability is 10,000 or more in a financial year. For instance, if your tax liability for the FY 2019-2020 exceeds 10,000, then you are required to pay advance tax in the same year.
Advance tax is for those who earn money from sources other than salary. It is applicable for self-employed individuals, professionals, and business men if their income exceeds a certain limit This includes money that comes from shares, interest earned on fixed deposits, rent or income received from house tenants. Senior citizens who are more than 60 years of age are exempt to advance tax.
Listed below are the steps that will help you calculate advance tax –
Just like regular tax payment, advance tax payment is also done using challan. There are many banks that allows you to pay advance tax through challans. You can also pay advance tax online from the comfort of your home. Here's a step-by-step guide that will help you pay advance tax online without any hassles –
Here's a list of benefits you get when you pay tax in advance -
Here's a schedule of advance tax payment for individual and corporate taxpayers –
On or before the 15th of June
On or before the 15th of September
On or before the 15th of December
On or before the 15th of March
Advance Tax Payable
15% of advance tax liability
45% of advance tax liability
75% of advance tax liability
100% of advance tax liability
As a citizen of India, you must pay your taxes on time. If you fail to do so by a stipulated timeline, then you are subject to pay a certain amount in the form of penalty as per Income Tax Act, 1961. Besides, if you are planning to buy a tax savings plan online, prefer to go with Canara HSBC OBC Life Insurance.
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