Individual taxation

The advance tax is based on the concept of ‘pay as you earn’ and an individual shall be liable to pay advance tax on income of current financial year on estimation basis, during a financial year in which such income is earned if the amount of income tax payable on such estimated income after deducting TDS exceeds ten thousand rupees or more i.e.,

Income Tax Payable  -  TDS =  Assessed Tax  (10,000 or more)

No advance tax is payable if the total tax liability after reducing the  tax deducted at source  is less than Rs. 10,000.

If an individual fails in payment of advance tax or does short payment of advance tax then Interest under section 234B is charged as per the provisions of the Income tax act, 1961 or say if advance tax paid by an individual is less than 90 per cent of the total tax payable by 31^st March or no advance tax is paid, then interest u/s 234B shall be chargeable.

Interest u/s 234B is calculated on the amount of difference between the assessed tax and the advance tax paid and it is charged @ 1% per month or part of the month from 1^st April of assessment year (for the relevant  previous year) till the date of payment of tax.

Any amount paid by way of advance tax on or before 31^st march shall also be treated as advance tax paid during the financial year for purpose of calculating interest u/s 234B of the Income Tax Act, 1961.

Thanks