Advance tax is a system of paying your income tax in installments throughout the year, rather than paying the full amount at the end of the financial year. It is calculated based on the estimated income for the current financial year, and is mandatory for certain taxpayers who have a tax liability of more than Rs. 10,000 after taking into account the tax credits that they are eligible for.
The due dates for advance tax installments vary depending on the type of income and the taxpayer’s tax liability. For individuals and Hindu Undivided Families (HUFs), the due dates are June 15, September 15, December 15, and March 15, while for companies, it is June 15, September 15, December 15, and March 30.
To calculate your advance tax liability, you can use the Income Tax Department’s online tax calculator or consult a chartered accountant. The calculator takes into account your income from various sources such as salary, house property, capital gains, business or profession, and other sources. Once you have calculated your advance tax liability, you can pay it online through the Income Tax Department’s e-filing portal or by visiting a designated bank.
It is important to note that non-payment or delayed payment of advance tax can result in interest and penalties. Interest under Section 234B is levied if the advance tax paid is less than 90% of the total tax liability, while interest under Section 234C is levied if the advance tax paid is less than the total tax liability. In both cases, the interest rate is 1% per month or part of the month.
In conclusion, advance tax is a system of paying your income tax in instalments throughout the year, based on your estimated income for the current financial year. It is mandatory for certain taxpayers, and failure to pay or delayed payment can result in interest and penalties. The due dates for installments vary depending on the type of income and the tax liability of the taxpayer, and taxpayers can calculate their advance tax liability using the Income Tax Department’s online tax calculator or by consulting a chartered accountant.