Advance Tax Payments
Advance tax plays a crucial role in the Indian taxation system, requiring taxpayers to proactively contribute towards their annual tax liability throughout the fiscal year. In this article, we will delve into the intricacies of advance tax, exploring its definition, the penalties associated with missing payment deadlines, and the obligations it entails for taxpayers.
Understanding Advance Tax:
Advance tax, also known as “pay as you earn” tax, is a mechanism wherein taxpayers prepay their income tax liabilities during the fiscal year rather than waiting until the year-end. Governed by section 208 of the Income Tax Act, 1961, individuals with projected tax liabilities exceeding Rs 10,000 are obligated to pay advance tax after considering tax deducted at source (TDS) from the previous year.
Advance Tax Due Dates:
The advance tax is divided into four instalments, each due on or before the 15th of the last month of the respective quarter. The due dates are as follows:
- On or before June 15: 15% of the advance tax must be paid.
- On or before September 15: 45% of the advance tax (less tax previously paid) must be settled.
- On or before December 15: 75% of the advance tax (minus tax already paid) is due.
- On or before March 15: 100% of the advance tax (minus tax already paid) must be paid.
Penalties for Missing Advance Tax Payment:
Failure to adhere to the specified due dates incurs penalties under sections 234B and 234C of the Income Tax Act. Section 234B applies to delays or shortfalls in advance tax payments, imposing a penal interest of 1% per month or part thereof. Meanwhile, section 234C applies to non-payment or insufficient payment of individual advance tax instalments.
Who Must Pay Advance Tax:
As per section 208, individuals whose estimated tax liability for the year is Rs. 10,000 or more must pay advance tax. Notably, resident senior citizens aged 60 years or above, without income from business or profession, are exempt from this requirement.
How to Pay Advance Tax Online?
Paying advance tax has been streamlined through online and offline channels. For online payments, taxpayers can follow these steps:
- Visit the Income Tax website (https://www.incometax.gov.in/iec/foportal/).
- Click on “e-Pay tax,” enter PAN and mobile number, and proceed to enter the OTP received.
- Select “Advance tax” after clicking on the appropriate assessment year.
- Enter the tax amount and select payment options.
- Click “Pay Now” to complete the transaction.
Conclusion
Advance tax is a proactive approach to fulfilling tax obligations and avoiding penalties. Understanding the due dates, penalties, and payment process is essential for taxpayers to successfully navigate the intricacies of advance tax. By adhering to the guidelines, individuals can ensure compliance with the Income Tax Act and contribute responsibly to the nation’s revenue system.
