Income tax alert: Pay your first instalment of advance tax by this date

What is advance tax?

Advance tax is the amount of income tax that should be paid in installments as per the due dates rather than in one lump sum.

Individuals and businesses pay income tax in advance through instalments rather than a lump sum at the end of the year. “It applies to all taxpayers, including salaried individuals, freelancers, and businesses, who have a total tax liability of ₹10,000 or more in a financial year,” said Amit Gupta, MD, SAG Infotech.

However, senior citizens aged 60 years or above who do not have business income are exempt from paying advance tax.

“For those under the presumptive taxation scheme (sections 44AD and 44ADA), the entire advance tax amount must be paid in one instalment on or before March 15th, or by March 31st at the latest,” added Gupta.

Due dates for advance tax payments 

15 June: 15% of advance tax

15 September: 45% of advance tax less advance tax already paid

15 December: 75% of advance tax less advance tax already paid

15 March: 100% of advance tax less advance tax already paid

How to pay advance tax?

-Go to the income tax website. 

-Click on ‘e-pay tax’ 

-Enter your PAN and password 

-Now, click on “Advance Tax” and choose the payment method 

-You can pay the amount by clicking the “Pay Now” button.

-After the payment is done, you’ll get a receipt as proof of your payment. 

What happens if taxpayers fail to pay advance tax?

Amit Gupta said failure to pay advance tax or late payment will result in interest charges under sections 234B and 234C of the Income Tax Act, 1961. Timely payments are essential to avoid penalties.

Overall, advance tax payments ensure a steady flow of income for the government and ease the burden of paying taxes in a lump sum for individuals and businesses. It is crucial to accurately estimate income and make timely payments to avoid interest and penalties.

Updated: 13 Jun 2023, 01:47 PM IST