Advance Tax: Meaning, Due Dates, Calculation, Payment, Penal Interest, and some FAQs

Spread the knowledge of Tax

Advance Tax- Every Person, whose estimated income tax liability for the financial year is Rs. 10,000 or more is required to pay advance tax. It applies to all taxpayers including salaried persons, freelancers, and businesses, but a resident senior citizen not having income from PGBP is not liable to pay advance tax.

Here in this post, we will understand the term “Advance Tax” and “Advance Tax Due Dates”.

Advance Tax

Advance Tax Payment

Advance Tax means Income Tax, which needs to be paid by the assessee in advance before year-end. Apart from the Tax Deducted at Source (TDS) the government collects tax in advance on a quarterly basis, which is called an Advance Tax.

These payments have to be made in installments on or before the due dates as provided by the department. This also reduces the burden of taxpayers by dividing the tax liabilities into parts and result in smaller cash outflow.

Advance Tax Due Dates

Advance Tax Payment Due Date
Advance Tax Due Dates

As per the law, the taxpayers are required to pay annual estimated tax in installments of 15%, 45%, 75%, and 100% on or before June 15, September 15, December 15, and March 15 respectively for every year.

But for presumptive taxation, e.g. Section 44AD, Section 44ADA, Section 44AE has to pay the whole advance tax liability in one installment on or before 15th March. They can also pay the entire amount (100%) by 31st March.

Related Article-

🎯 All about section 44AD of the Income Tax Act- Presumptive Taxation Scheme

🎯 All about section 44ADA of the Income Tax Act- Presumptive Taxation Scheme

As per the latest update in Budget 2021, taxpayers need to pay advance tax on dividend income only after the declaration or payment of dividends.

Chart for Advance Tax Due Dates- Following are the advance tax payment due dates for the year, applicable to all assessee except presumptive taxation scheme-

Advance Tax Due Dates Advance Tax Liability
On or before 15th June 15% of advance Tax
On or before 15th September 45% of advance Tax less advance tax already paid
On or before 15th December 75% of advance Tax less advance tax already paid
On or before 15th March 100% of advance Tax less advance tax already paid
Advance Tax Due Dates

Also Read- TDS and TCS Rates for assessment year 2022-23

Following are the advance tax due dates for the year, applicable to assessee opted for a presumptive taxation scheme

Advance Tax Due Dates Advance Tax Liability
On or before 15th March 100% of Advance Tax
Advance Tax Due Dates

How to calculate advance tax

To calculate advance tax liability for the year. you need to follow the below steps-

Particulars Amount
First, calculate income under the 5 heads xxxx
Less- Broughts forward losses and allowance xxxx
Gross Total Income xxxxx
Less- Chapter VI Deductions xxxx
Estimated Total Income xxxxx
Calculate Income Tax on Estimated Income (As per the Tax Slab) xxxx
Add- Surcharge xxxx
Total Tax Payable xxxxx
Add- Education Cess and H. Education Cess xxxx
Total Tax Liability xxxxx
Less:- Any Relief xxxx
Less:- TDS deducted xxxx
Advance Tax Liability xxxxx

Must Read- Section 201(1A) TDS Interest, Section 234E Late Filing Fee, and Section 271H TDS Penalty

How to pay Advance Tax

Advance Tax payment can be made online or offline. Here you will learn about both types of payments

Advance Tax Payment Online

To pay advance tax online you can follow the below procedure-

👉 Visit Income Tax e-payment website from here

👉 Select challan No. ITNS-280 under Non-TDS/TCS block

👉 Fill in the required details and select advance tax option

👉 Choose preferred payment option and pay the tax.

👉 After successful payment, a challan certificate will be displayed which contains the relevant information.

👉 This certificate is proof of Advance Tax Payment.

Advance Tax Payment offline

If you want to make advance tax payment offline, the procedure of the same is here-

👉 First of all download the challan 280 from here

👉 Now fill the required details

👉 After that, you have to visit the designated bank with filled challan and cash/cheque.

👉 Bank will provide you the payment slip which is the proof for payment of advance tax.

Penal Interest for Advance Tax

If the assessee is required to pay Advance Tax but the same is not paid before the advance tax due dates or paid on or before the advance tax due dates but the amount paid is less than the required liability, then the taxpayer is required to pay interest u/s 234B and 234C of the Income Tax Act.

Interest u/s 234B- If the assessee did not pay the advance tax on the due dates, then he is required to pay penal interest u/s 234B.

Interest u/s 234C- If the assessee did not pay full estimated liability of the advance tax, then he is required to pay penal interest u/s 234B.

Read complete provision and calculation of Interest under section 234A/B/C of the Act

Frequently Asked Questions – FAQs

  1. What is the due date for payment of advance tax?

    As per the law, the taxpayers are required to pay annual estimated tax in installments of 15%, 45%, 75%, and 100% on or before June 15, September 15, December 15, and March 15 respectively for every year.

  2. Can Advance tax be paid after 15th March?

    If any taxpayers fails to pay advance tax by 15th March, then he can pay the advance tax by 31st March, but he has to pay penal intertest with it.

  3. How is Advance Tax Calculated?

    First, calculate income under the 5 heads
    Less- Brought’s forward losses and allowance
    Less- Chapter VI Deductions
    = Estimated Total Income

    Now, calculate Income Tax on Estimated Income (As per the Tax Slab)
    Add- Surcharge
    = Total Tax Payable
    Add- Education Cess and H. Education Cess
    = Total Tax Liability

    Less:- Any Relief
    Less:- TDS deducted

    = Advance Tax Liability

  4. Can Advance Tax be paid online?

    Yes, advance tax can be paid online-

    👉 Visit Income Tax e-payment website from here
    👉 Select challan No. ITNS-280 under Non-TDS/TCS block
    👉 Fill in the required details and select advance tax option
    👉 Choose preferred payment option and pay the tax.
    👉 After successful payment, a challan certificate will be displayed which contains the relevant information.
    👉 This certificate is proof of Advance Tax Payment.

  5. What is the penalty for late payment of advance tax?

    If the assessee is required to pay Advance Tax but the same is not paid in time or paid in time but the amount paid is less than the required liability, then the taxpayer is required to pay interest u/s 234B and 234C of the Income Tax Act.

    Interest u/s 234B- If the assessee did not pay the advance tax on the due dates, then he is required to pay penal interest u/s 234B.

    Interest u/s 234C- If the assessee did not pay full estimated liability of the advance tax, then he is required to pay penal interest u/s 234B.

  6. Who are exempted from paying advance tax?

    Every Person, whose estimated income tax liability for the financial year is Rs. 10,000 or more is required to pay advance tax. It applies to all taxpayers including salaried persons, freelancers, and businesses, but a resident senior citizen not having income from PGBP is not liable to pay advance tax.

New Tax Route LinkedIn

Disclaimer: The information contained in the above article are solely for informational purpose after exercising due care. However, it does not constitute professional advice or a formal recommendation. The author does not own any responsibility for any loss or damage caused to any person, directly or indirectly, for any action taken on the basis of the above article.

Give Feedback/Suggestion- Hope you all find it useful, please give your valuable feedback & let us know if there is an error. Thanks in Advance

Compiled by- CA Chirag Agarwal (Practicing Chartered Accountants)


Spread the knowledge of Tax

Leave A Reply

Your email address will not be published.