Must Pay Advance Tax without Failure to Avoid unwanted Penalties. Eligible employees, traders, and self-employed individuals must pay advance tax before the deadline. Here is the calculator to estimate your advance tax.
Attention taxpayers! If your income tax payable is more than Rs. 10,000, you must pay advance tax. March 15th is the last day to pay the final instalment of advance tax. Failure to pay by today’s deadline may result in hefty penalties.
Advance tax is the payment of tax in anticipation of future income and is to be paid in instalments rather than at the end of the financial year. Those whose tax payable on estimated income is Rs. 10,000 or more are required to pay advance tax. This includes employees, traders, and self-employed individuals. However, employees whose company deducts their tax at source (TDS) are exempt from paying advance tax unless they earn additional income.
Senior citizens above 60 years of age who do not have past income from business or profession and those whose estimated taxable income in any financial year is less than Rs. 10,000 are also exempt from paying advance tax.
To calculate advance tax, assess all types of income in the current financial year. Deduct tax deductions from the estimated income and calculate the tax payable on the remaining income. If this total value is Rs. 10,000 or more, advance tax must be paid in instalments within the specified period.
The first instalment, 15% of the total amount, should be paid by June 15th. The second instalment, 45% of the total amount, should be paid by September 15th. The third instalment, 75% of the total amount, should be paid by December 15th. Finally, 100% of the total amount should be paid by March 15th.
Penalties are applicable for delayed payments of advance tax. Interest will be charged at 1% per month on the amount due. If you fail to pay an instalment, the next instalment will add three months’ interest. Even if there is a delay of only one day, three months’ interest must be paid. If the advance tax is not paid by March 15th, or if the amount paid is less than the amount due, the arrears should be cleared by March 31st along with a penalty of 1% per month. On the other hand, if you pay more, you can claim a refund. Interest of up to 6% will also be charged on any refund.
