Advance Tax Payment - Due Date, How to Calculate and Pay Advance Tax Online?

Advance tax ispaid by individuals who have income from other sources also beyond their regular salary. These sources can include earnings from rent, capital gains, lottery winnings, interest from fixed deposits, and other similar sources of income.

The second installment to pay the advance tax due date is 15th September. Get your advance tax dues paid

Contents

• What is Advance Tax?
• Who is liable to pay Advance Tax?
• Who is not liable to pay Advance Tax?
• Advance Tax Due Dates For FY 2024-25
• Advance tax Calculation
• Example for Advance Tax Calculation
• How to pay Advance Tax online?
• What is Advance Tax Late Payment Interest?
• Benefits of Paying Advance Tax
• Refund in Advance Tax Payment
• Which Forms are Required in Advance Tax?
• FAQs on Advance Tax

What is Advance Tax?

Advance tax, also known as "pay as you earn" tax, is a system where taxpayers make prepayments of their income tax throughout the financial year instead of paying a lump sum at year-end. It is mandated when the anticipated tax liability for the year exceeds a certain threshold, typically specified in tax regulations. This ensures a steady flow of revenue for the government and helps taxpayers manage their tax obligations effectively.

Individuals with an estimated tax liability exceeding Rs. 10,000 in a financial year are generally required to pay advance tax. However, there's an exception to this rule: if you're a senior citizen aged above 60 and don't have any business income, you are exempt from making advance tax payments.

Who is liable to pay Advance Tax?

Advance tax is typically required to be paid by individuals and entities with significant tax liabilities. Here are the key categories of taxpayers who should pay advance tax:

• Individuals (including salaried employees): If your total tax liability after accounting for TDS (Tax Deducted at Source) is expected to be Rs. 10,000 or more for the financial year, you are required to pay advance tax.
• Self-Employed and Professionals: Individuals earning income through business, freelancing, consultancy, or any profession are also liable to pay advance tax if their estimated tax liability exceeds Rs. 10,000 for the financial year.
• Corporate Entities: All companies, including public and private limited companies, are required to pay advance tax. The due dates and percentages may vary based on the company's size, revenue, and profit.
• Partnership Firms and LLPs: Partnership firms and Limited Liability Partnerships (LLPs) should also pay advance tax if their estimated tax liability exceeds Rs. 10,000 for the financial year.
• Non-Resident Taxpayers: Non-resident individuals and foreign companies earning income in India are subject to advance tax requirements if their tax liability crosses the Rs. 10,000 threshold.
• Capital Gains: Individuals earning capital gains from the sale of assets such as real estate, stocks, or other investments may need to pay advance tax if their estimated capital gains tax liability is Rs. 10,000 or more.
• Businesses with Specified Incomes: Some businesses, such as lottery and horse racing, are required to pay advance tax on specified incomes irrespective of the Rs. 10,000 threshold.

For Example:

In the above case, since the total estimated tax liability exceeds Rs. 10,000/- but the estimated tax liability after deducting TDS is less than Rs. 10,000/-, then he/she is not liable to pay any advance tax.

Don't wait until the advance tax due date looms – secure your financial future today with timely advance tax payments. Pay the advance tax dues today.

Who is not liable to pay Advance Tax?

While many taxpayers are required to pay advance tax, there are specific groups of individuals and entities who are not liable to pay advance tax. These include:

• Tax Relief for Senior Citizens:
  Individuals aged 60 years or above, without income from business or profession, are exempt from paying advance tax.
• Income below Taxable Limit:
  Taxpayers with total income not exceeding the taxable limit are not required to pay advance tax.
• Presumptive Taxation Scheme for Businesses:
  Small businesses with an annual turnover of up to Rs. 2 crores can opt for the presumptive taxation scheme and are exempt from advance tax.
• Farmers and Agriculturists:
  Income from agricultural activities is not considered for advance tax calculation, providing relief to farmers and agriculturists.
• Commission or Brokerage Income:
  Individuals earning income through commission or brokerage are exempt from paying advance tax on such earnings.
• Income Covered under Section 44ADA:
  Professionals with specified income covered under Section 44ADA, such as certain professionals in the fields of medicine, law, engineering, etc., are exempt from advance tax.
• Individuals with Business Income under Presumptive Taxation:
  Individuals having business income covered under presumptive taxation provisions are not required to pay advance tax separately on such income.
• Capital Gains:
  Taxpayers with income from capital gains are exempt from paying advance tax if they choose to pay the entire tax liability at the time of e filing income tax return.
• Salary Income:
  Salaried individuals are generally not required to pay advance tax as their employers deduct tax at source (TDS) from their salary.
• Dividend Income:
  Individuals receiving dividend income are not subject to advance tax on such earnings.

Advance Tax Due Dates For FY 2024-25

Starting from the financial year 2016-17, both corporate and individual taxpayers have been treated equally when it comes to the due dates and the percentages of advance tax they need to pay.

Due date of Advance Tax Payment for both individual and corporate taxpayers

Due date of advance tax payment for individuals opted for presumptive taxation scheme u/s 44AD/44ADA - Business and Profession income