What is advance tax– Advance tax is the amount of income tax that is paid in advance rather than a lump-sum payment at the year-end. Advance tax is to be paid in instalments as per the due dates decided by the income tax department.
Liability on whom– As per section 208 of the Income Tax Act 1961, every person whose estimated tax liability for the year is more than or equal to `10,000 is liable to pay advance tax. Senior citizens who are above the age of 60, not having any income from business or profession are not required to pay advance tax.
*Due date for payment of advance tax for assessees under Section 44AD/44ADA ( Presumptive Taxation Opted) : The advance tax to be paid is 100% by March 15.
*Due date for payment of advance tax for assesses other than assessee referred to in Section 44AD, 44ADA (Presumptive Taxation Not Opted) –The advance tax to be paid by an individual, as well as corporate assessees, are as follows-
S. No. |
Due Date |
Advance Tax Payable |
|---|---|---|
How to make payment of advance tax-Challan No. ITNS 280 is the form that needs to be duly filed on the prescribed due dates. Pre-requisites of Challan No. ITNS 280 are:
After the payment is made, a Challan Identification Number (CIN) will be provided. Assessee is required to keep a note of the same and use this CIN while filing for income tax return. Also, verify once whether the IT department has received the online payment made through ITNS 280.
Shortfall or excess payment of advance tax- In case if assessee has paid excess amount of advance tax he would be entitled for refund subject to section 237 of the Income Tax Act with 6% interest per annum on the excess amount subject to Section 244A of the Act if the excess is more than 10% of the tax liability.
In case assessee found shortfall of advance tax he can still pay the advance tax before 31st March and the same would be treated as advance tax.
Penalty provision- If assessee fails to make payment of advance tax assessee will be liable for interest u/s 234B and 234C of income tax act.
Section 234B- The taxpayer should have paid the maximum amount (least 90%) of the total tax payable by the end of the financial year. Failure to pay the tax, if the amount is more than 10% of the liability, then a penalty of simple interest 1% will be charged under Section 234B.
Section 234C- The interest penalty is 1% of the tax amount due from the due dates of advance tax payment till the actual payment date. The amount to be paid, is calculated after tax deductions under Sections 90, 91, and 115JD.
Calculation of advance tax– Performa for advance tax calculation is as follows-
Particulars |
Amount |
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