Advance Income Tax
On 15th June, the first instalment of advance tax payment is required for FY 2023-24 and by this date, 15% of advance tax liability has to be paid. with Domiyance, Compute your advance tax liability and before time surely pay the advance tax instalment to avoid penal interest.
Due Dates for Payment of Advance Tax
- First Instalment – by 15th June every year you must pay 15% of tax liability.
- Second Instalment – by 15th September, you must pay 45% of the tax liability.
- Third Instalment – by 15th December you must pay 75% of your tax liability.
- Fourth Instalment – by 15th March you must pay 100% of tax liability.
Business/Professional assessee declaring income under the presumptive income scheme u/s 44AD or 44ADA also has to pay the whole of the advance tax by the 15th of March of the Year. However, any amount deposited by 31st March is treated as advance tax of that financial year.
Key Point of Advance Tax
STEP 1 – What is Advance Tax
Advance tax is the income tax that is paid in advance instead of lump sum payment at year end. It is the tax that you pay as you earn. These payments have to be made in instalments as per due dates provided by the income tax department.
STEP 2 – Who Should Pay Advance Tax
If your total tax liability is Rs 10,000 or more in a financial year, you have to pay advance tax. The advance tax applies to all taxpayers, salaried, freelancers, and businesses. Senior citizens (60 years or more) having business income must pay advance tax. The taxpayers who have opted for the 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 the option to pay all of their tax dues by 31 March. 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.
STEP 3 – Who is Exempt From Advance Tax
A resident senior citizen (an individual of age 60 years or above), not having income from business or profession is not liable to pay advance tax. An Individual, HUF or firm whose income is taxed on the presumptive basis under income tax is not required to pay tax in advance. This relaxation is ordinarily available to small business, paying tax as a percentage of the turnover and not on actual profits.
STEP 4 – Interest on Late Payment
The advance tax must be paid within due date. Interest under section 234B of the Act shall have to be paid if the total advance tax paid is less than 90% of the assessed tax or if the entire advance tax has not been paid. Interest at the rate of 1% per month from the beginning of the assessment year until the payment thereof shall have to be paid on account of such default