Advance Tax – Who Should Pay? Due Date?
Budget 2021 update :It has been proposed to exempt the senior citizens from filing income tax returns if pension income and interest income are their only annual income source. Section 194P has been newly inserted to enforce the banks to deduct tax on senior citizens more than 75 years of age who have a pension and interest income from the bank.
Budget 2021 update :Taxpayers need to pay advance tax on dividend income only after the declaration or payment of dividend.
What is Advance Tax?
Advance tax means income tax should be paid in advance instead of lump sum payment at year end. It is also known as pay as you earn tax. These payments have to be made in instalments as per due dates provided by the income tax department.
Who should pay Advance Tax?
Salaried, freelancers and businesses: If your total tax liability is Rs 10,000 or more in a financial year you have to pay advance tax. Advance tax applies to all taxpayers, salaried, freelancers, and businesses. Senior citizens, who are 60 years or older, and do not run a business, are exempt from paying advance tax.
Presumptive income for Businesses: The taxpayers who have opted for presumptive taxation scheme under section 44AD have to pay the whole amount of their advance tax in one instalment on or before 15 March. They also have an option to pay all of their tax dues by 31 March.
Presumptive income for Professionals: Independent professionals such as doctors, lawyers, architects etc. come under the presumptive scheme under section 44ADA. They have to pay the whole of their advance tax liability in one instalment on or before 15 March. They can also pay the entire amount by 31 March.
Due Dates for payment of Advance Tax
FY 2019-20 & FY 2018-19 for both individual and corporate taxpayers
|Due Date||Advance Tax Payable|
|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|
For taxpayers who have opted for Presumptive Taxation Scheme under section 44AD & 44ADA – Business Income
|Due Date||Advance Tax Payable|
|On or before 15th March||100% of advance tax|
Our Tax Experts will calculate your advance tax liability so you can pay your dues on time.
We will explain the calculation by way of an example. Sanjay is a freelancer earning income from the profession of interior decoration. For the FY 2019-20, Sanjay estimates his annual gross receipts at Rs 20,00,000. Sanjay estimates his expenses at Rs 12,00,000. Sanjay has deposited Rs 40,000 in PPF account. Sanjay has also paid Rs 25,000 towards LIC premium. Further, Sanjay has paid Rs 12,000 towards medical insurance premium. The professional receipts of Sanjay are subject to TDS. Sanjay estimates a TDS of Rs 30,000 on certain professional receipts for the FY 2019-20. Besides professional receipts, Sanjay estimates an interest of Rs 10,000 on fixed deposits held by him. Sanjay’s advance tax liability would be as below:
|INCOME ESTIMATION FOR ADVANCE TAX||AMOUNT (Rs)||AMOUNT (Rs)|
|Income from profession:|
|Income from other sources:|
|Interest from fixed deposit||10,000|
|GROSS TOTAL INCOME||8,10,000|
|Less: Deduction under section 80C|
|Contribution to PPF||40,000|
|Deduction under section 80D||12,000||77,000|
|Add: Education cess @ 4%||2,364|
|TAX PAYABLE IN ADVANCE||31,464|
|ADVANCE TAX PAYMENTS|
|Due date||Advance tax payable||Amount (Rs)|
|15th June||15% of Advance tax||4,700|
|15th September||45% of Advance tax||14,100|
|15th December||75% of Advance tax||23,600|
|15th March||100% of Advance tax||31,400|
Frequently Asked Questions
When should I pay advance taxIf your tax liability for a year after reducing TDS exceeds Rs 10,000, you will be liable for payment of advance tax
Is an NRI liable for payment of advance tax?An NRI, who has an income accruing in India in excess of Rs 10,000, is liable for payment of advance tax.
I am a senior citizen having pension and interest income. Should I pay advance tax?Resident senior citizens not having income from business or profession are not liable for advance tax.
Will I be penalized if I do not pay advance tax?Non payment of advance tax will result in levy of interest under 234B and 234C of the Income tax Act, 1961.
Can I claim deduction under 80C while estimating income for determining my advance tax?Yes. You can consider all these deductions while estimating your income for the year for computing your advance tax liability.
What happens if I miss the deadline for payment of the fourth installment of my advance tax i.e. on 15 MarchYou can still go ahead with payment of advance tax on or before the 31 March of the year. Such payment will still be treated as advance tax only.
How do I make an advance tax paymentAdvance tax payment is made using Challan 280 just like any other regular tax payment.
Why should advance tax payments be made?Advance tax payments benefit both the government and the individual/organisation paying it. From the government’s perspective, it provides a continuous flow of income throughout the year. From the individual/organisation’s perspective, it reduces the year-end burden of paying taxes in a lump sum. Non-payment of advance tax could result in the taxpayer being liable to interest under the Income Tax law. Hence, timely payments of advance tax should be made.
How to check advance tax payment status?To check the status of your advance tax payment challan, go to https://tin.tin.nsdl.com/oltas/index.html. Select CIN (Challan Identification Number) Based View. Then enter the required details being asked for, in order to view the status. You can also check the list of advance tax payments made by logging in to your income tax account at https://www.incometaxindiaefiling.gov.in/home and going to My account -> View Form 26AS (Tax Credit), and entering the financial year and type of view/download.
How to make advance income tax payment online?
To make advance tax payment online, follow the steps given below:
- Visit the Tax Information Network of the Income Tax Department of India at https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
- Click on ‘Proceed’ under the CHALLAN NO./ITNS 280 option.
- Enter the tax applicable, types of payment, mode of payment, PAN, assessment year and other details mentioned in the challan.
- Ensure that once filled-in, you double-check all the data that you have entered.
- You will then be redirected to the bank’s website to complete the payment.
- After completing the payment, you will get a tax receipt on the next screen, on which you can see the payment details. You can see the BSR code and challan serial number on the right side of the challan. Save a copy of this tax receipt for future reference. You will need to enter the BSR code and challan number in your tax return.
How to write a cheque for advance tax payment?
Taxpayers can pay advance tax both online and offline. For offline payments, the challan can be downloaded at: Income Tax India . Once downloaded, the details listed should be filled up, keeping in mind the following instructions:
- A separate challan should be used for each type of payment.
- Quoting of the Permanent Account Number (PAN) is mandatory. Quoting a false PAN may attract a penalty of Rs. 10,000/- as per section 272B of the Income tax Act, 1961.
- Taxpayers should draw/issue the cheque/DDs towards payment of income tax as under –
Pay _________________ (Name of the bank where the Challan is being deposited) A/c Income-tax.
- Taxpayers should ensure that the bank’s acknowledgement contains the (1) BSR code of the bank branch, (2) Date of deposit of challan, and the (3) Challan serial number, as these details will have to be quoted in the Income Tax Return.
How to download advance income tax payment receipt?To view the advance tax payment challan, go to https://tin.tin.nsdl.com/oltas/index.html. Select CIN (Challan Identification Number) Based View. Enter the required details, and click on ‘View’. Once the challan details are displayed on the screen, you can either print out the same or save a screenshot. Taxpayers can also download the advance tax payment receipt/challan by visiting the website of the bank through which advance tax payment was made. An option will be available to download the advance payment receipt.