Advance Tax Payment- Procedure and Provision

Advance Tax- Apart from the Tax Deducted at Source (TDS) the government collects tax in advance on a quarterly basis, which is called an Advance Tax. This also reduces the burden of taxpayers by dividing the tax liabilities into parts and result in smaller cash outflow. In this article, we will read about the provision of Advance Tax Payment.

What is Advance Tax

Advance Tax means Income Tax, which needs to be paid by the assessee in advance before year-end. These payments have to be made in installments on or before the due dates as provided by the department.

Who has to make Advance Tax Payment

For every financial year, the assessee needs to pay tax in advance if his tax liability is expected to be Rs. 10,000 or more. Advance Tax applies to all taxpayers including salaried, freelancers, professional, and senior citizens. However senior citizens having the age of 60 years or more than 60 years and not running any business are not required to pay advance tax.

What is the due date for payment of Advance Tax?

Advance Tax needs to be paid by the assessee in 4 installments but for presumptive taxation, it can be paid 100% in the last installment. Here is the table for the due date of payment of advance tax.

Advance Tax Payment Due Date for all the assessee except presumptive taxation scheme is as under-

Due DateAdvance Tax Liability
On or before 15th June15% of advance Tax
On or before 15th September45% of advance Tax less advance tax already paid
On or before 15th December75% of advance Tax less advance tax already paid
On or before 15th March100% of advance Tax less advance tax already paid

Also Read- TDS returns and forms- All about Form 24Q, Form 26Q, Form 16, and Form 16A

Advance Tax Payment Due Date for assessee opted for presumptive taxation scheme

Due DateAdvance Tax Liability
On or before 15th March100% of Advance Tax

Also Read-

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

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

How to calculate advance tax

To calculate advance tax liability, you need to follow the below steps-

ParticularsAmount
First, calculate income under the 5 headsxxxx
Less- Broughts forward losses and allowancexxxx
Gross Total Incomexxxxx
Less- Chapter VI Deductions xxxx
Estimated Total Incomexxxxx
Calculate Income Tax on Estimated Income (As per the Tax Slab)xxxx
Add- Surcharge xxxx
Total Tax Payablexxxxx
Add- Education Cess and H. Education Cess xxxx
Total Tax Liabilityxxxxx
Less:- Any Reliefxxxx
Less:- TDS deductedxxxx
Advance Tax Liabilityxxxxx

Advance Tax calculator

For calculating the advance tax you can follow the above steps or in a simple way you can use the Income Tax Calculator. Visit here to calculate Advance Tax Liability.

How to pay Advance Tax

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

Also Read- What is the Interest and Penalty for late filing of ITR

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.

Also Read- TDS Due date for payments and the due date for filing of return

Penal Interest for 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.

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

Frequently Asked Question- FAQs

  1. How do you paid advance tax?

    Advance Tax Payment Online

    To pay advance tax online you can follow the below procedure-
    👉 Visit the Income Tax e-payment website from here
    👉 Select challan No. ITNS-280 under Non-TDS/TCS block
    👉 Fill in the required details and select the advance tax option
    👉 Choose the 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.

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

    As per the law, the due date for advance tax payment are as follow-

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

  3. How is the advance tax payment calculated?

    Calculate advance tax payment as follow-

    First, calculate income under the 5 heads xxxx
    Less-
    Brought 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

  4. Is Advance Tax date extended for FY 2021-22?

    No, there is no extension of advance tax payment for FY 2021-22 and the due dates with payment % are as follow-

    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.

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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.

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Compiled by- CA Chirag Agarwal (Practicing Chartered Accountants)

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