Advance Tax

Under the pay-as-you-earn scheme, every assessee is required to pay advance tax on the estimated income in the financial year itself. If the tax payable on the estimated income is Rs. 10,000 or more, then the liability to pay advance tax arises. The assessee can estimate his advance tax liability at the rates in force in the financial year. The tax deducted at source shall be reduced from the advance tax payable. The assessee can also revise the advance tax payable in the remaining instalments on the basis of revised estimates of his income and make tax payments accordingly. The assessee is not required to submit the estimate of income or advance tax liability calculation to the tax authorities.

Who is not required to pay Advance Tax?

1.      An assessee whose income from business or profession is computed under section 44AD on a presumptive basis at 8% of the turnover is not required to pay advance tax.

2.      With effect from financial year 2012-13, senior citizens not having any business income are not required to pay Advance Tax

Due Date for Advance Tax

Advance Tax is paid in instalments and the due dates are as follows:

Non-Corporate Assessee –

 

Due Dates Advance Tax Payable
On or before 15 September Upto 30% of advance tax payable
On or before 15 December Upto 60% of advance tax payable
On or before 15 March Upto 100% of advance tax payable

Corporate Assessee –

 

Due Dates Advance Tax Payable
On or before 15 June Upto 15% of advance tax payable
On or before 15 September Upto 45% of advance tax payable
On or before 15 December Upto 75% of advance tax payable
On or before 15 March Upto 100% of advance tax payable

Consequences of default in payment of Advance Tax

1.      If there is default in payment of advance tax or if the advance tax is underpaid, then interest will be charged under section 234B as under:

Situation in which interest is payable Amount on which interest is payable Rate of interest Period for which interest is payable
Failure to pay Advance Tax Interest is payable on the tax amount Simple interest @ 1% per month for every month or part of month From 1st April of assessment year to date of determination of total income under section 143(1) and where a regular assessment, to the date of such regular assessment
Advance Tax paid but tax payment is less than 90% of the assessed tax Assessed Tax less advance tax paid Simple interest @ 1% per month for every month or part of month From 1st April of assessment year to date of determination of total income under section 143(1) and where a regular assessment, to the date of such regular assessment

 

2.      Where the assessee has not paid his tax on pro-rata basis over the course of the financial year, the assessee has to pay interest u/s 234 C. In other words if there is a deferment of advance tax (default in payment of advance tax instalments or advance tax instalments been underpaid), then interest shall be charged under section 234C at a simple interest of 1% per month for 3 months for short payment in first and second instalments and 1% for one month in case of 3rd instalment.

Advance Tax Payment

Advance tax payment is made on the Challan Form No. 280 either electronically or physically at the designated Bank branches. The payment can be made electronically at the following link below

https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp

For payment of advance tax physically at the designated branches, the challan Form 280 can be downloaded from the following link below

https://www.tin-nsdl.com/oltas/oltas-download.php

The list of designated bank branches can be found out from the following link below

https://www.tin-nsdl.com/oltas/oltas-bank-branches.php

From 1st April 2008, all corporate assesses and other assesses (who are subject to compulsory audit under section 44AB) will have to make electronic payment of tax through internet banking facility offered by authorized banks. An assessee can make electronic payment of taxes also from the account of any other person. However, the challan for making such payment must clearly indicate the PAN no. of the assessee on whose behalf the payment is made-Circular Bo. 5/2008, dated July 17, 2008.

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