Taxpayers, please word that right this moment, September 15 is the final day to pay the second instalment of advance tax for the monetary yr 2023-2024.
What is an Advance Tax?
Advance tax is a proactive method to fulfilling your earnings tax obligations, permitting you to pay your earnings tax in installments all through the fiscal yr reasonably than dealing with a hefty lump sum on the finish. The first installment i.e. 15 per cent of the whole quantity needs to be paid by fifteenth June. The fee of the second Instalment or 45 per cent of the tax needs to be made by the fifteenth of September. The third installment of the 75 per cent of the advance tax needs to be cleared by fifteenth December. The remaining quantity or 100 per cent of the tax needs to be paid on or earlier than fifteenth March.
Who pays an Advance Tax?
Every particular person whose estimated tax legal responsibility for the yr is Rs10,000 or extra, shall pay his tax prematurely.
“However it’s to be famous that the ₹10,000 or extra restrict is arrived after the deduction of all of the tax credit of TDS/ TCS/ overseas tax credit score/ Section 89 aid and so forth. from the unique estimated tax legal responsibility,” said Archit Gupta, Founder and CEO, Clear.
Citing an example, the Clear CEO explained that if a person’s estimated tax liability of the year is ₹10,00,000 on his income from salary, interest income, dividend income, and TDS on salary is ₹9,00,000 and ₹50,000 is on earning from interest, dividend, etc., then his liability will be ₹50,000. In this case, advance tax needs to be paid by the person.
Penalty if you fail to pay Advance Tax
When a taxpayer fails to pay their income tax prior to the due date, they would be liable to pay interest on the unpaid tax under sections 234B and 243C. “Punctuality matters in taxation; missing the quarterly deadlines can lead to additional costs. As per sections 234B and 234C, a penalty interest of 1% per month or part thereof is applied for default in payment of advance tax,” stated Abhishek Soni, CEO and Co-founder Tax2win.
“Interest u/s 234B and 234C and be levied on the default on paying the advance tax,” said Archit Gupta.
How to pay Advance Tax?
“You can opt for paying this tax either through online or offline mode. The process includes splitting your tax obligation into four parts, each of which is due in the final month of a quarter and must be paid by the 15th of that month,” stated Amit Gupta, MD, SAG Infotech.
In easy phrases, anybody who expects to owe ₹10,000 or extra in taxes for the yr must pay advance tax. However, senior residents who’re 60 years previous or older and should not have earnings from a enterprise or occupation should not required to do that, in line with the earnings tax division’s web site. Salaried individuals who don’t have any earnings aside from wage additionally needn’t pay advance tax.
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Updated: 15 Sep 2023, 01:28 PM IST
