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How to calculate advance tax?
Latest Update:
CBDT has issued a circular on 11th January 2022 extending the timelines for certain direct tax compliances for AY 2021-22.
1. ITR filing due date extension:
i) ITR filing for taxpayers covered under tax audit is extended to 15th March 2022
ii) ITR filing for transfer pricing cases is extended to 15th March 2022
2. Furnishing audit report:
i) Due date to furnish the audit report as per the Income Tax Act is extended to 15th February 2022
ii) Due date to furnish the audit report for transfer pricing cases is extended to 15th February 2022
Union Budget 2021 Outcome
a. Exemption from ITR filing to senior citizens aged 75 years and above, earning only pension and interest income.
b. The income tax department launched pre-filled ITRs with additional details to simplify the return filing process.
c. The due date for filing belated and revised returns is reduced by 3 months. This also means that the IT department will have to process the returns and send a notice under section 143(1) by 31st December.
Advance tax calculator is a Use this intuitive tool from ClearTax to calculate your advance tax liability
We will explain the calculation by way of an example. Ajay is a freelancer earning income from the profession of interior decoration. For the FY 2019-20, Ajay estimates his annual gross receipts at Rs 20,00,000. Ajay estimates his expenses at Rs 12,00,000. Ajay has deposited Rs 40,000 in PPF account. Ajay has also paid Rs 25,000 towards LIC premium. Further, Ajay has paid Rs 12,000 towards medical insurance premium. The professional receipts of Ajay are subject to TDS. Ajay estimates a TDS of Rs 30,000 on certain professional receipts for the FY 2019-20. Besides professional receipts, Ajay estimates an interest of Rs 10,000 on fixed deposits held by him. Ajay’s advance tax liability would be as below:
| INCOME ESTIMATION FOR ADVANCE TAX | AMOUNT (Rs) | AMOUNT (Rs) |
| Income from profession: | ||
| Gross receipts | 20,00,000 | |
| Less: Expenses | 12,00,000 | 8,00,000 |
| Income from other sources: | ||
| Interest from fixed deposit | 10,000 | |
| GROSS TOTAL INCOME | 8,10,000 | |
| Less: Deduction under section 80C | ||
| Contribution to PPF | 40,000 | |
| LIC premium | 25,000 | |
| 65,000 | ||
| Deduction under section 80D | 12,000 | 77,000 |
| TOTAL INCOME | 7,33,000 | |
| TAX PAYABLE | 59,100 | |
| Add: Education cess @ 4% | 2,364 | |
| 61,464 | ||
| Less: TDS | 30,000 | |
| TAX PAYABLE IN ADVANCE | 31,464 |
| ADVANCE TAX PAYMENTS | ||
|---|---|---|
| Due date | Advance tax payable | Amount (Rs) |
| 15th June | 15% of Advance tax | 4,700 |
| 15th September | 45% of Advance tax | 14,100 |
| 15th December | 75% of Advance tax | 23,600 |
| 15th March | 100% of Advance tax | 31,400 |
Advance tax means income tax should be paid in advance instead of lump sum payment at year end. It is also known as pay as you earn tax. These payments have to be made in instalments as per due dates provided by the income tax department.
Salaried, freelancers and businesses– If your total tax liability is Rs 10,000 or more in a financial year you have to pay advance tax. Advance tax applies to all taxpayers, salaried, freelancers, and businesses. Senior citizens, who are 60 years or older, and do not run a business, are exempt from paying advance tax.
Presumptive income for Businesses–The taxpayers who have opted for presumptive taxation scheme under section 44AD have to pay the whole amount of their advance tax in one instalment on or before 15 March. They also have an option to pay all of their tax dues by 31 March.
Presumptive income for Professionals– Independent professionals such as doctors, lawyers, architects etc. come under the presumptive scheme under section 44ADA. They have to pay the whole of their advance tax liability in one instalment on or before 15 March. They can also pay the entire amount by 31 March.
Read in detail about presumptive taxation here Want a CA to calculate and help pay your advance tax dues?
FY 2019-20 & FY 2018-19 for both individual and corporate taxpayers
| 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 |
For taxpayers who have opted for Presumptive Taxation Scheme under section 44AD & 44ADA – Business Income
| Due Date | Advance Tax Payable |
|---|---|
| On or before 15th March | 100% of advance tax |
Our Tax Experts will calculate your advance tax liability so you can pay your dues on time.
If your tax liability for a year after reducing TDS exceeds Rs 10,000, you will be liable for payment of advance tax
An NRI, who has an income accruing in India in excess of Rs 10,000, is liable for payment of advance tax.
Resident senior citizens not having income from business or profession are not liable for advance tax.
Non payment of advance tax will result in levy of interest under 234B and 234C of the Income tax Act, 1961.
Yes. You can consider all these deductions while estimating your income for the year for computing your advance tax liability.
You can still go ahead with payment of advance tax on or before the 31 March of the year. Such payment will still be treated as advance tax only.
Advance tax payment is made using Challan 280 just like any other regular tax payment. You may read our detailed article on online payment of income tax.
Advance tax payments benefit both the government and the individual/organisation paying it. From the government’s perspective, it provides a continuous flow of income throughout the year. From the individual/organisation’s perspective, it reduces the year-end burden of paying taxes in a lump sum. Non-payment of advance tax could result in the taxpayer being liable to interest under the Income Tax law. Hence, timely payments of advance tax should be made.
To check the status of your advance tax payment challan, go to https://tin.tin.nsdl.com/oltas/index.html. Select CIN (Challan Identification Number) Based View. Then enter the required details being asked for, in order to view the status. You can also check the list of advance tax payments made by logging in to your income tax account at https://www.incometaxindiaefiling.gov.in/home and going to My account -> View Form 26AS (Tax Credit), and entering the financial year and type of view/download.
To make advance tax payment online, follow the steps given below:
Taxpayers can pay advance tax both online and offline. For offline payments, the challan can be downloaded at- https://www.incometaxindia.gov.in/Forms/107010000000345598.pdf Once downloaded, the details listed should be filled up, keeping in mind the following instructions-
To view the advance tax payment challan, go to https://tin.tin.nsdl.com/oltas/index.html. Select CIN (Challan Identification Number) Based View. Enter the required details, and click on ‘View’. Once the challan details are displayed on the screen, you can either print out the same or save a screenshot. Taxpayers can also download the advance tax payment receipt/challan by visiting the website of the bank through which advance tax payment was made. An option will be available to download the advance payment receipt.
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