Alert! Pay your 2nd Instalment of Advance Tax before 15th September 2021
Have you received a notice of advance tax payment from the income tax department? Well don’t worry, you are not the only one. The ITD sent these mails as a reminder to taxpayers who paid advance tax in the previous financial year. So, let’s learn more about advance tax and its due dates.
So, let’s learn more about advance tax and its due dates.
What is Advance Tax?
Advance Tax is a “pay-as-you-earn” regime for regular payment of your annual income tax in advance. Advance tax is the amount of income tax paid upfront rather than as a lump sum at the end of the year.
It must be paid if your outstanding tax liability is INR 10,000 or more. The advance tax can be paid in 4 equal instalments at the same time interval. The following table shows the due dates for making payment of Advance Tax:
|Due Dates of Instalment
|Income Tax Payable
|On or before 15th June
|15% of Total Tax Liability
|On or before 15th September
|45% of Total Tax Liability
|On or before 15th December
|75% of Total Tax Liability
|On or before 15th March
|100% of Total Tax Liability
Does everyone have to pay advance tax?
The Advance tax must be paid by the taxpayer if the tax liability is more than Rs. 10,000.
Individuals who only have salary income usually do not have to pay advance tax, as their employer deducts TDS on their salary income. If salaried employees have income from other sources such as trade, investments, rent or any other head income then that individual may be liable to pay advance tax. It can be said, any type of non-salaried income can be eligible to pay advance tax.
Businesses are required to pay advance tax on their profits. However, in business income changes every day, every month and it may not be possible to pay the exact input tax. Businesses has to pay the advance tax by estimating their income at the end of each quarter. If you pay less than your actual income tax liability, you will pay 1% monthly interest on the difference. If you pay more than your actual income tax liability, you can claim a refund at the time of filing your income tax return.