As the name says, advance tax is the tax paid by individual before the end of financial year. Tax is paid in 3-4 installments depending upon the type of assesee. It is a “pay while you earn” approach. Every person whose total income exceeds 10,000 is liable for advance tax payment on or before the due dates. The due dates for payment of advance tax are as follows:
|Due date||Corporate Assessee (company)||Non Corporate Assessee|
|Upto 15th June||15% of tax||Not applicable|
|Upto 15th September||45% of tax||30% of tax|
|Upto 15th December||75% of the tax||60% of the tax|
|Upto 15th march||100% of the tax||100% of the tax|
In case of the salaried employee, advance tax is applied if income from sources other than salaries exceeds Rs 10,000. This is because a tax is already deducted from salary as TDS.
HOW TO CALCULATE ADVANCE TAX?
Advance tax can be calculated in the following manner:
- Estimate the total income: estimate the total of income from all the sources. Income can be generated from sources like salaries, house property, capital gains and other sources. Such income is estimated on the basis of income of previous years.
- Expenses: the next step is to estimate the expenses of the asesse this also includes carry forward losses and deductions under section 80C to 80U
- Net income: subtract the expenses from the total income and ascertain net income of the asessee.
- Tax liability: once the net income is ascertained, tax liability is calculated using the slab rates. And educational cess of 1% and higher education cess of 1% is added.
HOW TO PAY ADVANCE TAX?
An individual can file advance tax either offline using payment challans at authorized banks. There are 926 banks authorized by the income tax department.
Advance tax can also be paid online by the following steps:
- Go the the income tax website
- Select the challan for advance tax
- Fill in your details
- Pay the money
- You’ll get a receipt. Make sure you keep a printout of this receipt.
Related Post: WHY SHOULD YOU ALWAYS FURNISH PAN WHEN TDS DEDUCTED?
WHAT IF YOU FAIL TO PAY ADVANCE TAX?
Installment of advance tax should be paid before or on the due date. Delay in payment of advance tax may attract interests. These interests are charged under section 234A 234B and 234C.
For any help on ITR Filing feel free to consult the tax experts at Taxraahi. You can file ITR yourself via our ITR software or get CA’s help on filing income tax return. You can also use the option of Business Return, Bulk Return or Revised Return Filing.