When and How to pay advance tax in India on your estimated income

Our general understanding on payment of income tax is that it’s paid at the end of the financial year before filling return of income. But in certain cases assessee is required to pay tax in advance in installments on or before the due date as specified in the IT act.

In this article we will be discussing provisions related to advance tax and will learn when and how to pay advance tax in India.

When assessees will be liable for advance tax

If net tax payable for the financial year is Rs 10000 or more then its obligatory to pay advance tax in installments on or before the due dates as specified in the act.

Salary individuals are no need to worry about advance tax as employer use to deduct TDS every month from their salary income in cases where income is above the basic exemption limit.

However, if salary individual has additional income from any other source not disclosed to employer and by including such income, net tax liability are going to be Rs 10,000 or more then such salary individual need to pay advance tax.

Salary individuals are advised to assess their liability if they have worked for more than one employer during the financial year.

So advance tax is applicable to all type of assessee including individual, partnership firm, company, trust if their net tax liability during the financial year is going to be Rs. 10000 or more.

advance tax payment due dates and limit

Due dates and amount to be paid as advance tax

As discussed above, advance tax has to be paid in installments before due dates for the period as specified in the act. Here are the due dates;

In IT act, we have two type of due dates for payment of advance tax. One is applicable to companies and the other one is applicable to all assessee other than companies.

Due dates for payment of advance tax

Applicable to companies

Due dates – On or Before % of advance tax payable
15th June 15%
15th September 45% minus amount paid in last installment
15th December 75% minus amount paid in last installments
15th March 100% minus amount paid in last installments

Applicable to all assessees other than companies

Due dates – On or before % of advance tax payable
September 15 30%
December 15 60% minus amount paid in last installment
March 15 100% minus amount paid in last installments

Advance tax payable means total tax liability for the year that assessees are required to assess by estimating their income. Its calculated based on that year’s estimated income.

Challan number 280 is required to be filled while making payment of advance tax. Assessee can use their net banking account after filing the challan and make payment of their dues.

After making payments of advance tax you need to save the counterfoil and its challan number, date of payment and BSR code to cross verify with form 26AS.

For non payment or short payment of advance tax, assessee will be liable to pay interest under section 234C at the rate of 1% per month (simple interest) if its not paid as per the above mentioned installments.

If 90% of total advance tax payable is not paid before the end of the financial year then assessee will be liable at the rate of 1% per month under section 234B of IT act in addition to above interest amount as calculated under section 234C.

If any capital gain arises after the due date of installment payment then interest will not be applicable on tax payable on capital gain. However, such tax on capital gain has to be paid in advance in remaining installments as applicable.

In case of excess payment, assessee can claim refund from IT department by filling IT return for the year. Senior citizens are exempted from paying advance tax if such senior citizen does not have any business income during the financial year.

Example for calculating advance tax

Sr. No. Particulars Amount in Rs.
1 Estimated income under all 5 heads XXX
2 Less: Carried forward losses XXX
3 Gross Total Income (1-2) XXX
4 Less: IT deductions (chapter VIA) XXX
5 Estimated total income (3-4) XXX
6 Tax (based on present rates of the year) XXX
7 Add: Surcharge XXX
8 Total tax payable (6+7) XXX
9 Relief u/s 89 XXX
10 Tax liability  (8-9) XXX
11 Education and SHEC Cess (3% on Sr. No. 10) XXX
12 Total Tax liability (10+11) XXX
13 Less: Relief u/s 90, 90A, 91 if applicable XXX
14 Less: MAT credit if applicable XXX
15 Less: TDS XXX
16 Advance Tax Payable (12-13-14-15) XXX
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