What is Advance Tax?
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.
Who should pay Advance Tax?
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
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Due Dates for payment of Advance Tax
FY 2019-20 & FY 2018-19 for both individual and corporate taxpayers
For taxpayers who have opted for Presumptive Taxation Scheme under section 44AD & 44ADA – Business Income
||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
||Advance Tax Payable
| On or before 15th March
||100% of advance tax
Our CAs will calculate your advance tax liability so you can pay your dues on time.
Frequently Asked Questions
When should I pay advance tax
If your tax liability for a year after reducing TDS exceeds Rs 10,000, you will be liable for payment of advance tax
Is an NRI 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.
I am a senior citizen having pension and interest income. Should I pay advance tax?
Resident senior citizens not having income from business or profession are not liable for advance tax.
Will I be penalized if I do not pay advance tax?
Non payment of advance tax will result in levy of interest under 234B
of the Income tax Act, 1961.
Can I claim deduction under 80C while estimating income for determining my advance tax?
Yes. You can consider all these deductions while estimating your income for the year for computing your advance tax liability.
What happens if I miss the deadline for payment of the fourth installment of my advance tax i.e. on 15 March
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.
How do I make an advance tax payment
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
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