Advance Tax Payment Due date, Applicability and Calculation

As the new fiscal year commences, it is critical for taxpayers to keep informed about their obligations. Advance tax payment is an important part of tax planning. This article will cover all of the important features of Advance Tax payment, from its relevance to payment options, due dates, penalties, and more.

Understanding Advance Tax Payment

Advance Tax is a system that requires taxpayers to pay their income tax due in installments before the fiscal year ends. Unlike the traditional practice of paying taxes at the end of the fiscal year, Advance Tax requires taxpayers to make periodic payments based on their expected income throughout the year.

Advance Tax is a proactive method of paying income taxes. It ensures a consistent inflow of revenue to the government, assisting it in properly controlling its expenses. Furthermore, it protects taxpayers from being burdened at the last minute and promotes prudent financial preparation.

Who Is Required to Pay Advance Tax?

Individuals, Hindu Undivided Families (HUFs), partnerships, corporations, and other entities that anticipate a tax due of Rs. 10,000 or more in a fiscal year are required to pay Advance Tax.

Advantages of Paying Advance Taxes

Prevent Last-Minute Stress

Taxpayers can escape the hassle of organizing a lump sum payment at the end of the year by paying in installments.

Financial Discipline

Advance Tax encourages taxpayers to practice disciplined financial management by requiring them to forecast their income and arrange their payments accordingly.

Interest Savings

Taxpayers are obligated to pay interest under Sections 234B and 234C of the Income Tax Act in the event of non-payment or underpayment. Paying advance tax on time helps to prevent interest costs.

Avoid Penalties

Paying Advance Tax on time allows you to avoid penalties, which can be extremely severe.

Advance Tax Calculation and Payment

Calculating Advance Tax Payment

Estimate your entire projected income for the year.
Estimated deductions and exemptions should be reduced.
To the remaining income, apply the applicable tax rates.
Divide the total tax liability into installments according to the due dates.

Paying Advance Tax Online

Visit the official website of the Income Tax Department.
Choose “Advance Tax” and enter the required information.
Select a payment method: net banking, debit card, credit card, or NEFT.
Receive the challan, which will include a unique Challan Identification Number (CIN) for future reference.

Offline Advance Tax Payment

Taxpayers can also make advance tax payments at recognized banks using physical challans.

Important Due Dates for AY 2024-25 / FY 2023-24

For Individuals and Corporate Taxpayers:

15th June 2023: 15% of estimated tax liability
15th September 2023: 45% of estimated tax liability
15th December 2023: 75% of estimated tax liability
15th March 2024: 100% of estimated tax liability

For Taxpayers under Presumptive Taxation Scheme:

15th March 2024: 100% of estimated tax liability

Penalties and Important Points

Penalties for Non-payment

Section 234B: 1% monthly interest on the overdue tax amount.

Section 234C: 1% interest per month for failure to make installment payments.

Important Points

Advance Tax is levied on all sorts of income, including salaries, capital gains, and business profits.
You are excused from paying Advance Tax if your tax liability is less than Rs. 1,000 after TDS.
The new tax site features an easy-to-use interface for making advance tax payments.

FAQs

What is tax advance payment?

It is a method of paying income taxes in installments before the fiscal year finishes.

How can I make an online payment for an income tax advance?

Visit the official income tax portal, complete the Advance Tax form, and pay using the available methods.

When is the deadline for paying advance taxes?

The due dates differ according to the type of taxpayer and the installment. Please refer to the deadlines stated.

In the new tax portal, how can I pay advance tax?

Follow the on-screen instructions to make an advance tax payment through the new site.

Is it possible to pay advance tax at any time?

No, each installment has a particular due date.

What is income tax Challan 280?

Challan 280 is used for income tax deposits, including Advance Tax.

Is it required to pay advance tax?

If your anticipated tax liability exceeds Rs. 10,000, you must file.

Is it possible to pay advance tax in cash?

No, you must pay it through an authorized bank or online.

How can I pay the tax imposed by Section 140B?

This section addresses self-assessment tax rather than advance tax.

How can I pay a Rs. 1,000 income tax penalty?

Penalties are determined automatically; you do not have to pay them manually.

How do I fill out an income tax challan?

Fill out the Challan 280 form according to the instructions on the income tax webpage.

What is the procedure for paying my income tax fee?

To pay your income tax dues, use the payment methods accessible on the income tax portal.

Conclusion

Every taxpayer is responsible for making advance tax payments. To avoid penalties and financial stress, stay informed, arrange your funds sensibly, and make your Advance Tax payments on time. Make sure your tax advisor keeps you up to date on estimated taxes if any. Not paying the right advance tax results in a huge amount of interest therefore always prioritize your compliance. Contact TAX VIC if you want support and consulting services to plan and save your taxes. Tax Vic is helping individuals and small businesses by looking after their compliance matters in India.

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