Know if your Liable to pay Advance Tax
Know if you are liable to pay Advance Tax
Every individual has certain responsibilities under different laws and when it comes to the Income Tax Act. One of the primary responsibilities is to pay the required tax on the income earned during the year. There are various ways in which the tax will be paid and this covers self-assessment tax, tax deducted at source, advance tax and tax on assessment.
Advance tax is the tax that is paid in advance for the income of a particular financial year. The normal expectation is that tax has to be paid only when the income is earned but under the tax provisions the tax payer has to actually estimate the income for the entire year and based on this pay advance tax at specific time intervals.
When shall a person be liable to pay advance tax?
- A Person Shall be liable to pay advance tax only if Tax Liability exceeds Rs. 10,000 i.e. a person shall be exempt from payment of Advance Tax If Tax Liability does not exceed Rs. 10,000.
- The Education Cess and Secondary Higher Education cess shall also be considered for the purpose of calculating the Tax Liability.
- A Senior Citizen who does not have Income under head Business or Profession shall be exempt from the Payment of Advance Tax.
What are the due dates of payment of advance tax?
| Due Date | Advance Tax Payable |
| On or before 15th June | 15% of advance tax |
| On or before 15th September | 45% of advance tax less advance tax already paid |
| On or before 15th December | 75% of advance tax less advance tax already paid |
| On or before 15th March | 100% of advance tax less advance tax already paid |
Interest on default in paying advance tax
Interest under section 234B is applicable when:
- Tax liability after reducing TDS for the financial year is more than Rs 10,000 and one does not pay any advance tax. or
- One has paid advance tax, but advance tax paid is less than 90% of ‘assessed tax’.
- In any one of the above cases, interest under section 234B shall be applicable. Interest is calculated @ 1% on Assessed Tax less Advance Tax. Part of a month is rounded off to a full month. The amount on which interest is calculated is also rounded off in such a way that any fraction of a hundred is ignored.
Interest under section 234C is applicable when:
- The interest for late payment is set at 1% on the amount of tax due. It is calculated from the individual cut off dates, till the date of actual payment of outstanding taxes. Computation of interest under Section 234C is as follows:
| 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 |
How can advance tax be paid online?
Advance tax can be paid online as well as offline.
To Pay online:
Step 1 – Login to the income tax website https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
Step 2 – Click on e-payment of Taxes tab
Step 3 – Now under the Service tab, select e-payment option
Step 4 – To pay advance tax, select Challan 280
Step 5 – Fill in the required details
Step 6 – Choose Net banking option to pay online
Step 7 – After successful payment, a challan certificate will be displayed which will contain the information number, payment details and bank name via which e-payment was made. This certificate is proof of the payment that has been done
To Pay advance tax Offline:
You have to visit the designated bank branch and fill the challan form and then pay the taxes