1. What is Advance Tax?If you have to pay Rs 10,000 or more in taxes in a financial year, advance tax may be applicable to you. Advance Tax means paying your tax dues on the dates (usually quarterly) provided by the income tax department. If you don’t pay advance tax on time or default completely, you may be liable to pay interest under section 234B.
2. Who needs to pay Advance Tax?All assesses including salaried employees, self-employed professionals, businessmen etc. are required to pay Advance Tax, where the tax payable even after reducing TDS already is Rs 10,000 or more.
3. Interest under Section 234BInterest under section 234B is applicable when:
- Your tax liability after reducing TDS for the financial year is more than Rs 10,000 and you did not pay any advance tax.
- You paid advance tax, but advance tax paid is less than 90% of ‘assessed tax’.