Important Details Regarding Advance Tax
When a person becomes liable to pay Advance Tax
- Every person is liable to pay advance tax if advance tax payable is Rs 10,000 or more. Tax on net income (plus surcharge) after deducting TDS (deducted/deductible) if exceeds Rs 10,000, assessee is liable to pay advance tax.
- A senior citizen not having any income from business/profession is not liable to pay advance tax.
When advance tax payment becomes due
|Due Date of payment of advance tax||For any assessee ( except column 3)||An assessee who declares his business/professional income In presumptive sections 44 AD(1) and 44 ADA (1)|
|On or before June 15 of the previous year||Up to 15% of advance tax payable|
|On or before Sept 15 of the Previous year||Up to 45% of advance tax||–|
|On or before December 15 of the Previous Year||Up to 75% of advance tax|
|On or before Mar 15 of the previous year||Up to 100% of advance tax||Up to 100% of advance tax payable|
Consequence of Non-payment of Advance Tax
For default in payment of advance tax (234B)-
- Interest under section 234B is applicable when:
- Your tax liability after reducing TDS for the financial year is more than Rs 10,000 and you did not pay any advance tax.
- You paid advance tax, but advance tax paid is less than 90% of ‘assessed tax’.
- In any one of the above cases, interest under section 234B shall be applicable.
- 234C – Interest under this section is based on individual cut off dates. ( e.g. June 15, Sept 15, etc). It is calculated from the individual cut-off date till the date of actual payment of outstanding taxes.
|Scenario||Rate of Interest||Period of Interest||Amount on which Interest is calculated|
|If Advance Tax paid on or before June 15 is less than 15% of the Amount*||Simple interest @1% per month||3 months||15% of Amount* (-)tax already deposited before June 15|
|If Advance Tax paid on or before September 15 is less than 45% of the Amount*||Simple interest @1% per month||3 months||45% of Amount* (-) tax already deposited before September 15|
|If Advance Tax paid on or before December 15 is less than 75% of the Amount*||Simple interest @1% per month||3 months||75% of Amount* (-) tax already deposited before December 15|
|If Advance Tax paid on or before March 15 is less than 100% of the Amount*||Simple interest @1% per month||————–||100% of Amount* (-) tax already deposited before March 15|
- Consider that your total tax liability for this financial year is Rs. 100,000 and it needs to be paid in installments as explained above. Assume there is no TDS here.
- If you made partial payments instead, you will be liable to pay interest as per the last column in the table below: Total interest Payable is Rs 2600
|Payment Dates||Advance Tax payable||Total Advance Tax paid ( Cumulative)||Shortfall (Cumulative)||Penalties (Cumulative)|
|15th June||15,000||5,000||10,000||@1% * 3*10,000 = 300|
|15th September||45,000||25,000||20,000||@1% * 3 *20,000 =600|
|15th December||75,000||35,000||40,000||@1% * 3 *40,000 =1200|
|15th March||1,00,000||50,000||50,000||@1% * 1 *50,000 =500|
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