Advance tax payment is the amount of Income Tax that pay in advance on the income earned during the year.
It is a system wherein taxpayers pay a share of their tax liability before the end of the year.
This is to be paid in installments as per the due dates decided by the income tax department.
Advance Tax Payment Deadline Extended if Due Date is a Holiday
The due date for 3rd advance tax instalment for FY 2024-25 is 15th December 2024.
As the due date falls on a Sunday which is a public holiday, taxpayers with no doubt can make the payment on 16th December 2024, without incurring any penal interest.
This flexibility is based on a 1994 circular, which states that if the due date falls on a public holiday, the next working day will be treated as the deadline.
Who are Liable to Pay Advance Tax?
As per section 208, every person whose estimated tax liability for the year if Rs. 10,000 or above, shall pay his tax in advance in the form of “Advance Tax”.
A taxpayer opting for presumptive taxation scheme of section 44AD is also liable to pay advance tax in respect of business covered u/s 44AD. The due date to pay for presumptive taxation scheme is 15th March i.e., minimum 100% of advance tax in one installment.
Only a resident senior citizen i.e., an individual of the age of 60 years or above during the relevant financial year not having any income from business or profession is exempted for paying advance tax.
Benefits of Paying Advance Tax
- The tax collection process speeds up.
- Defaulting tax payment chances are reduced.
- Taxpayers need not worry about the shortage of money or tax payments at the last moment or at the time of filling an Income Tax Return.
Installments of Advance Tax and Due Dates
| Due Date of Instalments | Advance Tax Payment Percentage |
| On or before 15th June | 15% of advance tax |
| On or before 15th September | 45% of advance tax (-) advance tax already paid |
| On or before 15th December | 75% of advance tax (-) advance tax already paid |
| On or before 15th March | 100% of advance tax (-) advance tax already paid |
Any tax payment made advance before 31st March shall be treated as advance tax paid during the financial year.
Interest for Non Payment of Advance Tax
Section 234B
Interest u/s 234B is applicable for non payment of advance tax or payment of advance tax of an amount is less than 90% of assessed tax.
The interest will be @ 1% per month on the unpaid amount if fails to make the advance tax payments.
Section 234C
Interest u/s 234C is applicable for delay in payment of advance tax beyond the due dates.
The interest will be @1% per month for a period of 3 months for every deferment.
For the last instalment of 15th March, the interest rate will be 1% for one month.
Interest is calculated on the amount of difference between the advance tax due by a specific date and the actual amount paid.
How to Calculate Advance Tax?
- Estimate your income and tax liability for the year after all the deductions.
- Add education cess, surcharge.
- Less TDS which has been deducted.
- The balance which we get is the advance tax payable.
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FAQs
Taxpayer who have opted for presumptive taxation scheme u/s 44AD have to pay the whole amount of their advance tax in one installment on or before 15th March.
An NRI who has an income in India but excess of Rs 10,000 is liable for payment of advance tax.
If advance tax paid by the assessee is more than his actual income tax liability, he can claim a refund by providing details of the tax deposited in your income tax return.
Advance tax paid will show in Form 26AS after a week from the end of quarter as well as in AIS.
An assessee can make the payment from account of any person.
The challan for making such payment must clearly indicate the Permanent Account Number of assessee on whose behalf the payment is made.