New Delhi: Advance tax refers to paying your income tax in instalments throughout the years instead of a lump sum at the year’s end. It’s often referred to as “pay as you earn” tax because you pay taxes as you receive income. The tax laws outline specific deadlines for these instalment payments.
When are the due dates for advance tax payments?
– First instalment: June 15
– Second instalment: September 15
– Third instalment: December 15
– Fourth instalment: March 15
Who needs to pay advance tax?
Individuals who have a net income tax liability of more than Rs 10,000 in a financial year are required to pay advance tax. Net tax liability is calculated as the estimated tax amount minus any TDS (tax deducted at source) within the financial year. These Individuals must make four quarterly payments to avoid incurring penal interest. (Also Read: Eid Bank Holiday June 2024: Will Banks Remain Closed For Bakrid? Check Details Here)
Who is exempt from paying advance tax?
However, individuals who opt for the presumptive taxation scheme only need to pay advance tax in one instalment by March 15th. Senior citizens (aged 60 or more) are exempt from paying advance tax if they do not have any income from business or profession. (Also Read: EPF Withdrawal Update: EPFO Discontinues Covid-19 Advance Facility – Check Details)
What are the consequences if you miss an advance tax payment?
If you miss an advance tax payment, penal interest is charged under sections 234B and 234C. The rate is 1 per cent per month if you pay less than 90 per cent of the assessed tax by the deadline.
How can you pay advance tax?
You can use the income tax department’s e-filing portal to pay your advance taxes. Payments can be made online or through an offline bank challan.