Advance Tax Calculator: Payment, and Due Dates

An essential part of the Indian tax system is advance tax. The government is guaranteed a consistent revenue stream by this "pay as you earn" tax structure.

Advance tax payment is compulsory for individuals and professionals who work for themselves, and with companies, with a tax burden of at least Rs. 10,000. This also applies to taxpayers covered by schemes of presumed taxes. But resident senior citizens who are 60 years of age or older and do not receive money from a business or profession are excluded from this payment.

The percentage of tax owed varies for each of the following due dates: June, September, December, and March 15th. Advance tax payments are paid on or before these dates. To stay out of trouble and continue paying taxes responsibly, adherence to advance tax regulations is crucial, and advance tax calculator helps you do the same.

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What is Advance Tax?

Advance tax definition, also known as pay-as-you-earn tax, refers to the system of paying taxes in advance, rather than as a lump sum, at the end of the tax year. Understanding advance tax helps in understanding how the government earns money to utilise it for the development of the country. By requiring individuals and businesses to make periodic advance tax payments, the government can avoid cash flow issues.

Additionally, advance tax purpose is to help taxpayers avoid the burden of a large, one-time tax payment. An advance tax calculator helps calculate this tax and plan their finances accordingly. This system also encourages financial discipline and allows for better financial planning, as individuals and businesses are required to estimate their income and pay taxes accordingly.

Who Needs to Pay Advance Tax?

Understanding the taxpayer criteria is crucial for effective tax management. The payment of advance tax must be made in the financial year in which the taxpayer receives the income. The due dates and percentages of advance tax liability vary on the taxpayer's category.

For instance, individuals are required to pay at least 15% of their income tax liability on or before 15th June, 45% by 15th September, not less than 75% by 15th December, and the total tax liability calculated by 15th March of each financial year, which can be done easily with an advance tax calculator.

However, senior citizens aged 60 years or above, without income from business or profession, are exempt from paying advance tax.

Additionally, taxpayers with total income not exceeding the taxable limit and those who have opted for the presumptive taxation scheme for businesses are not required to pay advance tax.

Calculating Your Advance Tax (Secondary Keyword: Advance Tax Calculation Formula)

The advance tax calculation formula involves estimating your total income for the financial year, deducting eligible deductions and exemptions, calculating your tax liability based on the applicable tax rates, and subtracting any tax deducted at source (TDS). Here is a step-by-step guide on how to calculate advance tax by using the tax formula:

Step 1: Estimate Total Income: Determine your projected total income for the financial year from all sources, including salary, business or professional income, capital gains, rental income, and other taxable income.
Step 2: Deduct Eligible Deductions: Subtract any deductions and exemptions, like Section 80C, 80D, or other applicable sections, to arrive at your net taxable income.
Step 3: Calculate Taxable Income: Subtract the deductions from your estimated total income to determine your taxable income, which is the basis for calculating your tax liability. An advance tax calculator calculates this tax liability accurately and in no time.
Step 4: Apply Applicable Tax Rates: Refer to the income tax slabs and rates applicable for the relevant financial year to calculate your tax liability based on your taxable income.
Step 5: Subtract TDS: Reduce the amount of tax already deducted at source (TDS) from your total tax liability to arrive at your net advance tax liability.
Step 6: Divide into Instalments: Divide your net advance tax liability into instalments due on specific dates during the financial year.
Step 7: Pay on Due Dates: Ensure timely payment of each installment on or before the prescribed due dates to avoid penalties.

The due dates for advance tax payments are June 15, September 15, December 15, and March 15 of the financial year. The percentages of advance tax liability to be paid on these dates are 15%, 45%, 75%, and 100%, respectively. An advance tax calculator can calculate the accurate tax as per your income.

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Important Dates for Advance Tax Payment

The important dates for advance tax payments for individual and corporate taxpayers are as follows:

On or before 15th June: 15% of advance tax
On or before 15th September: 45% of advance tax
On or before 15th December: 75% of advance tax
On or before 15th March: 100% of advance tax

These advance tax due dates outline the payment schedule, ensuring timely contributions towards tax liabilities throughout the financial year. Individual and corporate taxpayers must adhere to these deadlines to avoid penalties and manage their tax obligations effectively.

How to Pay Advance Tax Online (Secondary Keyword: Online Payment Procedure)

For payment of advance tax, follow these detailed instructions for online payment procedure using the official e-filing portal:

Visit the e-filing portal of the Income Tax Department of India.

On the left side of the home page, click on the 'e-Pay Tax' option under the 'Quick Links' section.

Enter your PAN, mobile number, and the 6-digit OTP received on your mobile number.

Select the 'Income Tax' box and click on 'Proceed'.

Select the 'Assessment Year' and 'Type of Payment' as 'Advance Tax' and click on 'Continue'.

Enter all the tax details, including the tax liability amount, and select the payment method and bank.

Preview the challan details and click on 'Pay Now'.

After completing the online payment, save a copy of the tax receipt for future reference.

Penalties for Late Payment of Advance Tax

Late payment of advance tax can result in interest charges and late payment penalties:

Section 234B of the Income Tax Act imposes penal interest for delays or shortfalls in advance tax payment. This interest is levied if the taxpayer fails to pay advance tax or pays less than 90% of the assessed tax liability.
Additionally, Section 234C imposes a three-month interest charge at a rate of 1% per month for deferment in payment of advance tax.

Timely payment of advance tax is crucial to avoid these penalties and interest charges, ensuring compliance with tax regulations, and an advance tax calculator helps you do this accurately while saving time and avoiding chances of error in advance tax calculation.

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Frequently asked questions

What is advance tax and why is it required?

Advance tax is the payment of tax during the financial year based on estimated income. It is required for taxpayers with a tax liability of more than Rs. 10,000.

Who is liable to pay advance tax?

Liability to pay advance tax applies to all taxpayers, except senior citizens without business 7410income.\

How do I calculate my advance tax liability?

To calculate your advance tax liability, estimate your annual income and deduct TDS, TCS, and Section 90 relief. An advance tax calculator helps you do it quickly and accurately.

What are the due dates for advance tax payments?

The due dates for advance tax payments are June 15, September 15, December 15, and March 15.

Can I pay advance tax online? If yes, how?

Advance tax payments can be made online through the Income Tax Department's website.

What happens if I miss an advance tax payment?

If a taxpayer misses an advance tax payment, they will be charged interest under sections 234B and 234C of the Income Tax Act. An advance tax calculator helps you pay the right tax at the right time, saving you from unnecessary charges.

Are senior citizens exempt from paying advance tax?

Senior citizens are exempt from paying advance tax, except those with business income.

How can I correct a mistake in my advance tax challan?

To correct a mistake in an advance tax challan, use the Income Tax Department's online challan correction feature within 7 days of payment.

Is an NRI required to pay advance tax?

NRIs are required to pay advance tax if they have an income accruing in India exceeding Rs 10,000.

What are the penalties for late payment of advance tax?

Penalties for late payment of advance tax include simple interest at 1% per month for deferment of installments. Interest is calculated from the first day of the assessment year until the date of regular assessment or re-computation.