Advance Tax Payment Due Date
For both people and businesses, advance tax payments are an essential component of taxation. They entail paying a percentage of one’s entire tax liability in advance by the deadlines that the relevant tax authorities have set. The government may more accurately project its anticipated tax revenue from economic earnings and incomes for the upcoming fiscal year with this early advance tax calculation.
Managing Your Tax Obligations: Stay Current with Advance Tax Payments
Maintaining accurate records of your tax responsibilities throughout the year and making timely payments, including advance tax payments, which are required at specific intervals for certain individuals and entities, is crucial.
Advance Tax Payment
Advance tax payment is a financial obligation imposed on individuals, regardless of whether they receive a salary, work as freelancers, or operate their businesses. This requirement arises when their annual tax liability exceeds ₹10,000 in a given fiscal year. Notably, there’s an exemption for senior citizens aged 60 and above who are not actively involved in business activities.
The concept of advance tax involves paying taxes in instalments based on your estimated income for the ongoing fiscal year. Unlike the conventional method of settling your tax dues in a single, lump-sum payment at the end of the fiscal year, advance tax operates on a “pay-as-you-earn” principle. This means that individuals, self-employed professionals, freelancers, and businesses are required to make periodic payments as they earn income throughout the year.
Significance of Advance Tax
Advance Tax holds significance because it serves to prevent penalties and interest charges resulting from delayed or non-payment of taxes. Furthermore, it plays a pivotal role in effectively managing cash flows and avoiding the accumulation of a substantial tax liability at the close of the fiscal year.
Advantages of Advance Tax Payment
Paying Advance Tax on schedule offers various advantages, which encompass:
- Steer clear of incurring interest and penalties.
- Enhance the management of cash flow.
- Prevent the stress and haste of last-minute tax payments.
- Ward off receiving default notices from the tax authorities.
You should submit your Advance Tax on four specified dates within the fiscal year: June 15th, September 15th, December 15th, and March 15th.
Advance tax must be paid by individuals, self-employed professionals, freelancers, and businesses if their tax liability surpasses ₹10,000.
To determine the Advance Tax payment, taxpayers should estimate their annual income based on the relevant tax brackets and compute their tax obligations. The payment schedule for advance tax is as follows:
- By June 15th, pay 15% of the total tax liability.
- By September 15th, pay 45% of the total tax liability.
- By December 15th, pay 75% of the total tax liability.
- By March 15th, settle the entire tax liability, which should amount to 100%.
Online Advance Tax Payment Process
To make advance tax payments online, you have two convenient options: using the income tax department’s e-filing portal or utilizing the net banking services offered by authorized banks. Here’s how it works:
- Visit the income tax department’s e-filing portal.
- Choose the ‘e-Pay Tax’ option.
- Select the appropriate tax payment category.
- Provide all the necessary data and complete your payment.
For those who prefer to make advance tax payments offline, it is possible to do so by physically going to an authorized bank and submitting the tax payment form along with the required payment. The bank will provide a challan as evidence of the payment made.
Advance Tax Requirements for Professionals Under the Presumptive Tax Scheme
Individuals operating under the presumptive tax scheme who are calculating their taxes in this manner must ensure that the full advance tax amount is paid in a single instalment before the March 15 deadline. Alternatively, they have the option to settle the entire tax liability by March 31. Those professionals who have chosen the presumptive tax system specified under Section 44ADA include independent professionals like doctors, lawyers, architects, and other skilled practitioners who can enrol in this program.
Advance Tax Payment Due Dates FY 2023-24
| Instalment | Advance Tax Due Date | Tax to be Paid |
| 1st Installment | 15th June | 15% of tax liability |
| 2nd Installment | 15th September | 45% of tax liability |
| 3rd Installment | 15th December | 75% of tax liability |
| 4th Installment | 15th March | 100% of tax liability |
Advance Tax Payment Due Dates FY 2022-23
| Instalment | Advance Tax Due Date | Tax to be Paid |
| 1st Installment | 15th June 2022 | 15% of tax liability |
| 2nd Installment | 15th September 2022 | 45% of tax liability |
| 3rd Installment | 15th December 2022 | 75% of tax liability |
| 4th Installment | 15th March 2023 | 100% of tax liability |
Advance Tax Payment Due Dates FY 2021-22
| Instalment | Advance Tax Due Date | Tax to be Paid |
| 1st Installment | 15th June 2021 | 15% of tax liability |
| 2nd Installment | 15th September 2021 | 45% of tax liability |
| 3rd Installment | 15th December 2021 | 75% of tax liability |
| 4th Installment | 15th March 2022 | 100% of tax liability |
Due Dates for Advance Tax Payment – FY 2020-2021
Individual and Corporate Taxpayers
| Advance Tax Payable | Due Date |
| 15% of advance tax less advance tax already paid | On or before 15th June 2020 |
| 45% of advance tax less advance tax already paid | On or before 15th September 2020 |
| 75% of advance tax less advance tax already paid | On or before 15th December 2020 |
| 100% of advance tax less advance tax already paid | On or before 15th March 2021 |
Taxpayers Choosing Presumptive Taxation Scheme – Business Income
| Due Date | Advance Tax Payable |
| by 15th March | 100% of advance tax |
Extended Deadlines for Advance Tax and Income Tax Return – FY 2023-24
Finance Minister Nirmala Sitharaman recently extended the Income Tax Return (ITR) filing deadline for Assessment Year (AY) 2024-25, moving it from the typical July/October timeline to November 30, 2024. Simultaneously, the government granted an extension for advance tax collection for the Fiscal Year (FY) 2023-24, allowing taxpayers relief from deferred tax payments until June 30, 2023. However, taxpayers falling within the advance tax category are strongly encouraged to settle their dues before June 30 to avoid incurring interest charges. It’s essential to note that, despite the return filing date extension, interest on advance tax remains applicable if not paid by June 30.
Sections 234 A/B/C and 234E govern interest and penalties for delayed tax payments. For those who experience delays in FY 2023-24 tax payments beyond June 30, Sections 234B and 234C will continue to apply, emphasizing the importance of adhering to tax deadlines in this unique and evolving tax landscape.
Penalties for Non-payment of Advance Tax
In cases of default, Section 234B outlines penalties and fines. For self-employed professionals and business owners, advance tax payment is mandatory when the tax liability, even after deducting TDS, amounts to ₹10,000 or more. Failure to pay on time or paying less than 90% of the assessed tax can result in penalties. Under this section, the applicable interest is 1% of the assessed tax after deducting the Advance Tax. The interest is calculated every month, rounding off to a full month, and the calculated amount is also rounded off.
Let’s consider an illustrative scenario:
Saurabh has a tax liability exceeding ₹10,000, amounting to ₹40,000, with no TDS deductions. He missed the advance tax deadline, and on May 30, while filing his taxes, he settled this outstanding amount. The original due date for the advance tax was March 15, which he didn’t adhere to.
Consequently, the calculated penalty is as follows:
Total Tax Liability (₹40,000) * Delay Period (2 months) * Penalty Rate (1%) = ₹800.
Hence, the penalty to be paid amounts to ₹800.
Key Points Regarding Advance Tax Payment
Here are some important points regarding Advance Tax Payment:
- NRIs are subject to advance tax if their income in India exceeds ₹10,000.
- All available deductions, such as those under Section 80C, can be factored in when making advance tax payments.
- Advance tax payments can be made through both online and offline methods.
- Missing the March 15 deadline for advance tax doesn’t incur penalties if paid by March 31.
- Challan 280 is a suitable method for making advance tax payments.
- Salaried employees with significant income from various sources like real estate, stocks, or investments yielding over ₹10,000 in profit must pay advance tax.
- Individuals using the Presumptive Tax Scheme must file their taxes before March 15.
- Senior citizens are exempt from this requirement, and investment income is not considered.
- The self-assessment tax is a type of advance tax utilized by specific income and professional categories.
Income Tax Return Deadline Extension Eligibility”
The ITR (Income Tax Return) filing deadline extension is available to individuals not subject to advance tax requirements.
Conclusion
We at Kanakkupillai can be a valuable resource for managing your tax-related obligations. We offer expert guidance and a wide range of financial services to assist you. Whether you make advance tax payments or file income tax returns, we provide expert support and guidance. Our team is dedicated to helping you understand the intricacies of tax regulations, accurately calculate your advance tax payments, and ensure that your income tax returns are filed on time. With our personalized assistance, we aim to keep you in compliance with tax laws and help you optimize your financial situation.
