Tax Troubles? We've Got You Covered!
Tax Advisory Services
Get Expert Consultation Now!
  • 2500 Cr. Saved Already!
  • Trusted by 1 Million+
  • 10+ Yr. of Industry Experience
Tax Advisor
linkedin
whatsapp

Advance Tax Payment - Advance Tax Due Dates, How to Calculate & Pay Advance Tax Online?

Updated on: 17 Feb, 2024 01:26 PM

The income tax return (ITR) filing season often brings stress for many taxpayers, owing to the substantial time and effort needed to gather all the necessary information, arrange it systematically, and subsequently complete the return form and the burden of huge tax liabilities to be paid. However, an effective strategy can help alleviate some of this burden - advance tax payment online.

Advance tax is a method of tax collection that allows taxpayers to pay their tax liabilities in installments throughout the financial year rather than in a single lump sum payment. This approach eases the financial strain and simplifies the ITR filing process. Let us read more below.

The due date for the fourth and last installment of advance tax( FY 2023-24) is 15th March 2024. Get your advance tax dues paid

What is Advance Tax?

Advance tax, also known as "pay as you earn" tax, is a system where taxpayers make prepayments of their income tax throughout the financial year instead of paying a lump sum at year-end. It is mandated when the anticipated tax liability for the year exceeds a certain threshold, typically specified in tax regulations. This ensures a steady flow of revenue for the government and helps taxpayers manage their tax obligations effectively.

Individuals with an estimated tax liability exceeding Rs. 10,000 in a financial year are generally required to pay advance tax. However, there's an exception to this rule: if you're a senior citizen aged above 60 and don't have any business income, you are exempt from making advance tax payments.


Who is liable to pay Advance Tax?

Advance tax is typically required to be paid by individuals and entities with significant tax liabilities. Here are the key categories of taxpayers who should pay advance tax:

  • Individuals (including salaried employees): If your total tax liability after accounting for TDS (Tax Deducted at Source) is expected to be Rs. 10,000 or more for the financial year, you are required to pay advance tax.
  • Self-Employed and Professionals: Individuals earning income through business, freelancing, consultancy, or any profession are also liable to pay advance tax if their estimated tax liability exceeds Rs. 10,000 for the financial year.
  • Corporate Entities: All companies, including public and private limited companies, are required to pay advance tax. The due dates and percentages may vary based on the company's size, revenue, and profit.
  • Partnership Firms and LLPs: Partnership firms and Limited Liability Partnerships (LLPs) should also pay advance tax if their estimated tax liability exceeds Rs. 10,000 for the financial year.
  • Non-Resident Taxpayers: Non-resident individuals and foreign companies earning income in India are subject to advance tax requirements if their tax liability crosses the Rs. 10,000 threshold.
  • Capital Gains: Individuals earning capital gains from the sale of assets such as real estate, stocks, or other investments may need to pay advance tax if their estimated capital gains tax liability is Rs. 10,000 or more.
  • Businesses with Specified Incomes: Some businesses, such as lottery and horse racing, are required to pay advance tax on specified incomes irrespective of the Rs. 10,000 threshold.

Example

Particular Amount
Total estimated tax liability for FY 2023-24 Rs. 65,000
Total TDS deducted Rs. 60,000
Tax liability after TDS Rs. 5,000

In the above case, since the total estimated tax liability exceeds Rs. 10,000/- but the estimated tax liability after deducting TDS is less than Rs. 10,000/- then he/she is not liable to pay any advance tax.

Don't wait until the deadline looms – secure your financial future today with timely advance tax payments. Pay the advance tax dues today.


Who is not liable to pay Advance Tax?

While many taxpayers are required to pay advance tax, there are specific groups of individuals and entities who are not liable to pay advance tax. These include:

  • Tax Relief for Senior Citizens:
    Individuals aged 60 years or above, without income from business or profession, are exempt from paying advance tax.
  • Income below Taxable Limit:
    Taxpayers with total income not exceeding the taxable limit are not required to pay advance tax.
  • Presumptive Taxation Scheme for Businesses:
    Small businesses with an annual turnover of up to Rs. 2 crores can opt for the presumptive taxation scheme and are exempt from advance tax.
  • Farmers and Agriculturists:
    Income from agricultural activities is not considered for advance tax calculation, providing relief to farmers and agriculturists.
  • Commission or Brokerage Income:
    Individuals earning income through commission or brokerage are exempt from paying advance tax on such earnings.
  • Income Covered under Section 44ADA:
    Professionals with specified income covered under Section 44ADA, such as certain professionals in the field of medicine, law, engineering, etc., are exempt from advance tax.
  • Individuals with Business Income under Presumptive Taxation:
    Individuals having business income covered under presumptive taxation provisions are not required to pay advance tax separately on such income.
  • Capital Gains:
    Taxpayers with income from capital gains are exempt from paying advance tax if they choose to pay the entire tax liability at the time of filing their income tax return.
  • Salary Income:
    Salaried individuals are generally not required to pay advance tax as their employers deduct tax at source (TDS) from their salary.
  • Dividend Income:
    Individuals receiving dividend income are not subject to advance tax on such earnings.

Advance Tax Due Date & Amount

Starting from the financial year 2016-17, both corporate and individual taxpayers have been treated equally when it comes to the due dates and the percentages of advance tax they need to pay.

Due date of Advance Tax Payment for both individual and corporate taxpayers

Advance Tax Due Date Amount of advance tax
On or before June 15 Up to 15% of advance tax liability
On or before September 15 45% of advance tax less advance tax already paid
On or before December 15 75% of advance tax less advance tax already paid
On or before March 15 100% of advance tax less advance tax already paid

Due date of advance tax payment for individuals opted for presumptive taxation scheme u/s 44AD/44ADA - Business and Profession income

Due Date Amount of advance tax
On or before 15th March 100% of advance tax

How to calculate advance tax?

To calculate advance tax online, follow these steps:-

  • Estimate your total income from all sources earned from 1st April- 31st March of the financial year for which you are doing the advance tax calculations.
  • Subtract all eligible deductions and exemptions.
  • Compute tax on such Income as per the tax regime opted by you.
  • Reduce the amount of tax paid by way of TDS/TCS.

What you get is your advance tax liability (if the amount of tax calculated is more than Rs. 10000). Now you need to pay advance tax in installments as discussed below:-

Due Date Advance Tax Liability Payable Advance Tax Payable(Rs.) Amount Already Paid(Rs.) Balance To Be Paid
15th June 15% 1,00,000 x 15%=15,000 Nil 15,000
15th September 45% 1,00,000 x 45% =45,000 15,000 30,000
15th December 75% 1,00,000 x 75% = 75,000 45,000 30,000
15th March 100% 1,00,000 x 100% = 1,00,000 75,000 25,000
Total Amount Paid 1,00,000

It is also important to know that for calculating your advance tax liability, you have only to estimate your total income for the year. The income you receive, the tax deducted at source, and the investments you make are all considered while calculating advance tax. The tax is then calculated on this estimated total income. You don’t need to prove your projections to the Income Tax Department!

Don’t let tax calculation stress you out! Calculating the right amount of tax can be tricky and time-consuming. Our Tax Advisory Service is a team of experts who can guide you through the process of Advance tax calculation and payment.


Example for Advance Tax Calculation

Preeti is working in a company and also working as a freelancer. Her earnings from her salary is 10 lakh rupees before providing the benefit of any deductions or exemptions. Her net receipts (after providing the benefit of expenses) from her freelancing work are around Rs.10 lakh. She is investing 1.5 lakh rupees in PPF and paying 25000 as her medical insurance. She is also getting 15000 as interest on her fixed deposits. Her employer has deducted TDS of Rs. 100000 from her salary income. So her final calculation and advance tax liability are as follows -

Income Estimate Amount In rs. Amount In rs.
Income from Salary:
Income 1000000
Less: Standard deduction 50000
Income from Salary: 950000
Income from Profession: 1000000
Income from other source: 15000
Gross Total Income 1965000
Deductions under Chapter VIA
80C: 150000
80D: 25000
Total Deductions 175000
Total Income 1790000
Tax Payable as per OLD Regime 349500
Education cess 13980
Total tax Liability 363480
TDS deducted 100000
Tax Payable as advance Tax 263480

Due date Advance Tax Payable Advance tax
15th June 15% of advance tax liability 39522
15th Sept 45% of Advance tax liability 79044
15th Dec 75% of Advance Tax Liability 79044
15th March 100% of Advance Tax Liability 65870

How to pay Advance Tax online?

Now that you have calculated your advance tax liability, it's time to pay. You can make advance tax payments online by following seven simple steps-

  • Step - 1 To pay advance tax click on the link https://www.incometax.gov.in/iec/foportal/.
    After clicking on the link the following page will appear. Click on E PAY tax on the left side-
    E PAY tax
  • Step- 2 After clicking on E-Pay tax, the following page will appear. On this page fill in the details like PAN and Mobile No. On the mobile no entered you will get OTP.
    PAN and Mobile No
    PAN and Mobile No
  • Step-3 After entering the OTP, the following page will appear. On the page under the income tax head click on proceed.
    click on proceed
  • Step- 4 After clicking on proceed, the following page will appear. On this page select AY for which you want to pay advance tax and select the type of payment as advance tax from various options.
    advance tax
    advance tax
  • Step -5 After selecting the type of payment, click on continue and feed the amount of tax to be paid in the tax category. After feeding the amount click on continue-
    click on continue
  • Step - 6 After clicking on continue, various payment methods will appear for payment of advance tax. Select the payment method at your convenience.
    Select the payment method
  • Step-7 After selecting the payment method, click on continue and make payment. After making payment, you will get a document as a challan for your reference and ITR Filing.

If want to pay the tax offline, download Challan 280 form from the Income tax department website, fill it and submit it at the bank.

If you're still confused or need assistance with any specific aspect of advance tax calculation or payment, talk to tax2win tax experts.


What is Advance Tax late payment interest?

The advance tax payment should be made within the four deadlines, i.e., June 15th, September 15th, December 15th, and March 15th of that financial year. You must pay at least 90% of the total taxes as advance tax by 31st March. Failure to make advance tax payments will result in an interest. This interest falls under two sections, Section 234C and Section 234B.

  • Failure to Pay Advance Tax Incurs Interest (Section 234B): According to Section 234B, it's essential to pay a minimum of 90% of your total tax liability as advance tax by March 31st. Neglecting advance tax payments results in an interest charge of 1% on the unpaid amount.
  • Delayed Advance Tax Payment Attracts Interest (Section 234C): When advance tax payments are delayed, Section 234C comes into play, imposing interest charges as follows:
    • If the advance tax paid by June 15th is less than 15% of the total tax liability, a monthly interest rate of 1% applies for three months. This is calculated based on 15% of the total tax liability minus any tax paid before June 15th.
    • If the advance tax paid by September 15th is less than 45% of the total tax liability, the same 1% monthly interest rate applies for three months. This calculation is based on 45% of the total tax liability minus any tax paid before September 15th.
    • If the advance tax paid by December 15th is less than 75% of the total tax liability, the interest rate remains 1% per month for three months. This is determined by calculating 75% of the total tax liability minus any tax paid before December 15th.
    • Lastly, if the advance tax paid by March 15th is less than 100% of the total tax liability, a 1% monthly interest rate applies for one month. This calculation is based on 100% of the total tax liability minus any tax paid before March 15th.

Benefits of Paying Advance Tax

  • The tax collection process speeds up.
  • Defaulting tax payment chances are reduced.
  • Increase in government funds as the government receives interest on the collected amount.
  • From the government's perspective, it provides a continuous flow of income throughout the year.
  • Taxpayers need not worry about the shortage of money or tax payments at the last moment or at the time of filing an Income Tax return.

Refund in Advance Tax Payment

Advance tax refers to paying a portion of your taxes before the end of the financial year. This is typically done in installments throughout the year, based on estimated income, to avoid a large tax liability at the end of the year. If you've paid more in advance tax than what you actually owe at the end of the financial year, you may be eligible for a refund. Taxpayers can claim a refund by filling out and submitting Form 30. They have to make the claim within a period of one year from the last year of the assessment year.


Which forms are required in Advance Tax?

To ensure compliance with tax regulations, it's crucial to properly fill out and submit Form Challan No. ITNS 280 on or before the deadlines. This form has specific preconditions that need to be met:

  • PAN Details: It's imperative to provide accurate PAN (Permanent Account Number) details to avoid any misallocation of tax payments. Using incorrect PAN details may result in the tax being credited to someone else's account.
  • Assessment Year: Selecting the correct assessment year is essential as the tax being paid is typically for the upcoming financial year. Ensure that you choose the appropriate assessment year to align with your tax liability.
  • Choosing a Payment Type: In the form, taxpayers must select the payment type based on the nature of the tax being paid:
    • Advance Tax: If the tax is being paid for the same fiscal year based on estimated income.
    • Self-Assessment Tax: If the tax is being paid after the end of the financial year to regularize the tax liability.
  • Challan Identification Number (CIN): Upon successful payment, a Challan Identification Number (CIN) will be generated. It's essential to record this number and use it when filing your income tax return. Additionally, ensure that the Income Tax Department has received the online payment made through ITNS 280 by verifying the transaction status.

Frequently Asked Questions

Q- Do I need to pay Advance tax on Capital Gain Income, Winnings from lotteries, horse races, etc., dividends, and business or professional income accrue for the first time?

Assessee cannot estimate capital gain, winnings from lotteries, horse races, etc., business or professional income accrued for the first time, or dividend therefore advance tax on such income shall be paid in remaining installment by the assessee after receipt of such income. When no installment is due, pay by 31st March of the relevant financial year to avoid interest.


Q- Who is exempt from advance tax payment?

if you're a senior citizen aged above 60 and don't have any business income, you are exempt from making advance tax payments.


Q- How do I show the amount of Advance Tax Paid while filing my ITR?

When filing an ITR, enter the amount of Advance Tax alongside TDS in the Prepaid Taxes section of the ITR form.


Q- Does a Non-resident senior citizen having interest income required to pay Advance Tax?

Yes, only resident senior citizens not having business and professional income are out of the advance tax liability.


Q- Will tax payments made after 15 March but before 31 March be considered advance tax or self-assessment tax?

Tax paid up to 31st March is considered to advance tax but subject to interest.


Q- How to verify the Advance Tax payment made to the Income Tax Department?

For this, after you make the payment, check whether the amount is reflected in your AIS. This can be done by logging into your income tax department account on the ITD website and clicking on the option to view AIS.


Q- Which challan is used for payment of advance tax?

Challan 280 is required to pay for advance tax payment.


Q- Does advance tax liability arise in the case of NRI also?

Yes, if the estimated tax liability exceeds Rs. 10,000/-


Q- What can happen if I avoid making advance tax payments?

If you avoid making advance tax payments then 1% interest per month or part of the month would be required to be paid u/s 234B and 234C. Additionally, you may suffer from the investigation by the council.


Q- What is the due date of advance tax payment?

June 15th, September 15th, December 15th and March 15th. Moreover, the entire tax liability should be paid by March 15 or before.


People also ask

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.