Advance tax payment deadline nears: All you need to know
The Income Tax Department has issued a reminder to taxpayers that the deadline for the third installment of advance tax payment is December 15, 2023. The IT department announced via its X handle, "Kind Attention Taxpayers: Do remember to pay the third installment of Advance Tax by 15th December 2023." With just three days remaining, the deadline for the third advance tax installment is approaching quickly. If you are eligible for paying advance tax, hurry up!
What is advance tax?
Advance tax means paying your income tax in smaller amounts throughout the year instead of paying it all at once when the year ends. This system requires taxpayers to estimate their annual income and pay taxes in installments on specific due dates set by the tax authorities. This process helps in the regular collection of taxes and prevents last-minute burdens on taxpayers.
Advance tax due dates for FY24
The tax payment schedule requires 15% of advance tax by June 15, 45% by September 15, 75% by December 15, and the full 100% by March 15. As per the guidelines, taxpayers have the option to pay advance tax either on their own or as directed by the Assessing Officer. Eligible taxpayers must estimate their present income and make payments accordingly. If paying on their own, they aren't obligated to submit income estimates or statements to tax authorities.
Who should pay advance tax?
If your total tax liability is Rs. 10,000 or more in a financial year (after accounting for tax deducted or collected at source) you have to pay advance tax. The advance tax applies to all taxpayers, salaried, freelancers, and businesses. People aged 60 years or more, and not running a business, are exempt from paying advance tax. So only senior citizens (60 years or more) having business income must pay advance tax
Presumptive taxation scheme
Any person opting for a presumptive taxation scheme (except Section 44AE) is not required to pay advance tax in four installments but can pay the whole amount of advance tax at once. Businesses following the presumptive taxation scheme (section 44AD) must pay their entire advance tax by March 15. Likewise, independent professionals like doctors, lawyers, and architects under the presumptive scheme (section 44ADA) are required to pay their full advance tax liability by March 15.
Revising and computing advance tax liability
Taxpayers can revise the remaining installment(s) if there is a change in tax liability after making payment of the first, second, or third installment of advance tax. Tax can be computed on current income (estimated by the taxpayer) at rates in force during the financial year. Deductions for relief of tax under sections 90, 90A, section 91, and tax credits under sections 115JAA or 115JD must also be considered while computing advance tax liability.
What if you fail to pay advance tax?
Failing to pay advance tax can result in interest charges under sections 234B and 234C of the Income-tax Act, 1961. Section 234B requires a minimum of 90% of total taxes as advance tax by March 31st, or else a 1% interest penalty is imposed. Section 234C specifies 1% monthly interest on shortfalls if payments by June 15, September 15, December 15, or March 15 fall below 15%, 45%, 75%, or 100%, respectively.
How to pay advance tax online?
Go to the Income Tax Department of India's e-filing portal. Find 'e-Pay Tax' in the 'Quick Links' section or use the search bar. Input and confirm your PAN, mobile number, and verify with the OTP received. Choose 'Income Tax' and proceed. Select the Assessment Year (e.g., 2024-25) and 'Advance Tax (100)' as the payment type. Fill in tax details and choose payment method and bank.
BSR code, challan number required for filing your tax return
Review challan details, make any necessary edits and proceed to pay. After payment, you will receive an acknowledgment. The BSR code and challan serial number will be on the right side of the receipt. Keep a copy of this receipt for future reference. You will need to enter the BSR code and challan number when filing your tax return.
