Advance Tax

What is Advance Tax and Due Dates for Advance Tax Payment

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What is Advance Tax?

Section (208) of the Income tax act, 1961 defines “Advance Tax” which means any tax that is paid before the end of the financial year. An assessee earning an income of more than Rs. 10,000 and above in a financial year is liable to pay advance income tax. Rather than receiving all the direct tax revenue at the end of the year, advance tax payment helps the government to meet its obligation on time.

DUE DATES FOR ADVANCE TAX PAYMENT

F.Y. 2019-20 for both Individual/corporate taxpayers

For the taxpayers earning income from any source (Salary, rent, business profession, capital gain etc.)

DUE DATE PERCENTAGE OF ADVANCE TAX
On or before 15th  June 15%
On or before 15th September 45%
On or before 15th December 75%
On or before 15th March 100%

For the taxpayers filing ITR under presumptive scheme (U/S 44AD or 44ADA)

DUE DATE PERCENTAGE OF ADVANCE TAX
On or before 15th March 100%

APPLICABILITY OF ADVANCE TAX

Advance tax is applicable on all tax payers whether you are a salaried professional or a freelancer or businessman.

Exception:

  • If your employer had already deducted TDS from your salary then you don’t have to worry for advance tax payment.
  • However, if such assessee has any other source of income viz. capital gains, house property & interest on investment, then he/she has to fulfil the advance tax liability condition.

FREQUENTLY ASKED QUESTIONS (FAQ’s)

What if advance tax paid is more or less than actual tax obligation?

  • If the advance tax paid is more than actual obligation then the excess amount will be refunded to your registered bank within the stipulated time by the Income tax department.
  • If the advance tax paid is less than the actual tax obligation then then assessee have to pay the remaining amount and the penal interest @1% per month may also apply on the outstanding amount.

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What if I miss the deadline of advance tax payment?

  • If you fail to pay your advance tax or the amount you pay is less than the mandated 30% of the total liability by the first deadline (September 25), you will be liable to pay interest on the amount, viz. 1% simple interest per month on the outstanding amount for three months.
  • The same would apply if you fail to pay the amount by the second deadline (December 15). Failing to pay the third and last instalment (March 25) would attract a penalty of 1% simple interest on the defaulted amount for every month until the tax is fully paid.

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How should I file advance tax for the current financial year?

  • Advance tax is paid just like any other tax payment by filing challan 280. Please follow the following steps to know more how the advance tax is filed:
    1. Login to NSDL –  click on “services”
    2. Then go to “e-payment”
    3. Select the relevant challan [In case of Advance tax select Challan 280]
    4. Enter other mandatory details such as PAN/TAN, address of the taxpayer and the bank through which the payment is to be made etc.
    5. On confirmation of the information so entered, you will be directed to the payments page.
    6. On successful payment a challan, a box will be displayed containing CIN, payment details and bank name through which online payment was made.

How to deposit advance tax with the government?

Advance Tax is to be deposited with the Government of India by using the challan prescribed in this behalf. The Challan can be downloaded from www.incometaxindia.gov.in & Tax can be paid in the designated banks by either of 2 modes viz. physical mode (cash/cheque) or online mode by using debit card or net banking. ​​In case anyone is not able to download challan even after the payment, then challan details will be updated in their form 26AS after a few days.

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The CAONWEB Team comprises qualified chartered accountants and experienced investment experts who are passionate enough about finances to bring you the best advice and tips on everything related to your hard-earned money.