Every Citizen of India is liable to pay taxes as per their income bracket. The tax payment helps the country in increasing the funds in the treasury which will be used further for the development of the nation.
In the Indian Tax system, there are different taxation and liability of an individual like GST, Service Tax, Income Tax, etc. . Here in this article, the concept of Advance Tax is discussed. We will find out What is Advance Tax Payment, How to Calculate, Due Dates, and much more.
Table of Contents
What is Advance Tax?
As the name suggests Advance Tax is a tax that you pay in advance in installments instead of a lump sum at the end of the year.
As per the Income Tax Act, section 208, any taxpayer having a liability of more than 10,000 in a financial year must pay the taxes in advance format i.e., within the same financial year instead of lump sum.
Who can Pay Advance Tax?
People who are self-employed individuals, professionals, and businessmen are primarily advanced taxpayers. If their income exceeds a certain limit then they are eligible for advanced tax payments.
The money that comes from shares, interest earned on fixed deposits, rent, or income received from house tenants are considered for Advanced tax payments. Senior citizens who are more than 60 years of age are exempt to advance tax.
Benefits of Advance Tax
The following are the benefits of Advance Tax Payments-
- Advance tax payments allow the individual to enjoy and stress-free and financially free life by making installment payments for the tax liability instead of a lump-sum amount.
- You can plan your finances much more easily because of installment payments of your tax liability. This ensures a steady cash flow throughout the year allowing you to prepare a budget for your tax payments.
- As per the income tax act, non-payment or underpayment of taxes attracts an interest-based penalty hence, advance tax payments prevent you from becoming a subject of this rule as you are pre-paying the tax liability.
- You can be subject to legal consequences which result in penalties but with Advance Tax payments individuals maintain good tax discipline and avoid any potential penalties from the tax authorities.
- This taxation method allows the individual in tax planning, allowing taxpayers to explore various tax deductions, exemptions, and investment options to optimize their overall tax liability
The Due Date for Advance Tax Payments for Corporate and Individuals
The following are the due dates for the individual and corporate within which they’ll have to pay the taxes-
| Due Date of Tax Instalments | Amount of Tax Payable |
| Either on or before the 15th of September | At least 15% of the advance tax liability |
| Either on or before the 15th of December | At least 45% of the advance tax liability |
| Either on or before the 15th of March | At least 75% of the advance tax liability |
| Either on or before the 15th of March | 100% of tax liability |
Tax Advance Payment for Business Owners and Self-employed
| Due Date of Tax Instalment | Amount of Tax Payable |
| Either on or before the 15th of September | At least 30% of the advance tax liability |
| Either on or before the 15th of March | At least 60% of the advance tax liability |
| Either on or before the 15th of March | 100% of the advance tax liability |
FAQ
In case you overpay the Advance Tax Payments, you are eligible to get a refund for your excess tax payments.
Yes, you can always voluntarily pay the taxes in advance to ensure that you don’t get burdened at the end of the financial year.
If you fail to pay the tax which you are liable to pay then you will be penalized and fines along with the interest will be charged on the payment amount.
Yes, Senior citizens are exempted from Advanced Tax payments and they can pay their taxes as a normally like everyone else.
I’m Shiv Kumar, a graduate with a passion for finance, marketing, and technology. My journey into finance started with a desire to understand money management and investing.
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