Advance Tax Payment: Meaning, Process, Due Dates, and Applicability for FY 2024-25
Updated: Oct 28
Advance tax payment is a pre-payment of income tax by individuals, businesses, and other entities on the basis of their predicted income for the financial year. This system ensures a continuous inflow of revenue to the government and assists taxpayers in managing their tax liabilities more appropriately. This will be an all-inclusive article to understand advance tax payment in India for FY 2024-25: its meaning, process, due dates, applicability, how to calculate, and the process for making the payment.
Table of Content
What is Advance Tax Payment?
Advance tax payment is a method by which the taxpayers pay the income tax in advance. This advance tax is computed based on the estimated income of the taxpayer. Every individual, businesses, and entities whose total tax liability exceeds INR 10,000 in a financial year, becomes liable to pay advance tax.
It's a "pay-as-you-earn" system, whereby the taxpayer is required to pay tax periodically at four intervals, based on one's own estimates of probable income during the year. This provision under the Indian Income Tax Act applies in respect of income arising from non-salaried sources like:
Income from business and profession
Income from house property (rental income)
Income from capital gains
Income from other sources (interest from fixed deposits, and lottery winnings)
Advance Tax Payment: Who Should Pay?
Taxpayers liable for making the advance tax payment include:
General Taxpayers:
Salaried individuals: Most salaried individuals already pay tax through TDS (Tax Deducted at Source). However, if they earn additional income (from rental properties, capital gains, and so on), they must calculate if their total tax liability exceeds INR 10,000. If it exceeds the said limit, they must make advance tax payments.
Businesses & Freelancers: Individuals running a business or working as freelancers need to pay advance tax payment if their tax liability exceeds INR 10,000 for the year.
Senior Citizens: Any person who is 60 years or more and does not have business income is exempt from this advance tax payment.
Presumptive Taxation for Businesses and Professionals: Taxpayers opting for the presumptive taxation scheme under Sections 44AD and 44ADA are required to pay their advance tax payment in one installment by March 15 or 31.
Advance Tax Payment Due Dates for FY 2024-25
Advance tax for the FY 2024-25 shall be paid as under:
On or before 15th June, 2024: 15% of the advance tax liability
By 15 September 2024: 45% of the advance tax liability (less the already paid amount)
By 15 December 2024: 75% of the advance tax liability less the amount already paid
By 15 March 2025: 100% of the advance tax liability less the amount already paid
For taxpayers under the presumptive taxation scheme, the entire advance tax payment is due in a single installment by March 15, 2025.
Advance Tax Payment: How to Calculate?
The following steps have to be taken for advance tax payment calculation:
Estimate Total Income: Calculate total income for the financial year from all sources, such as capital gains, rental income, professional income, salary, and interest on fixed deposit
Deduct Eligible Deductions: Subtract deductions available under sections like 80C for investments, 80D for medical insurance, and so on.
Compute Tax: The current tax slab rates are applied to the net income to compute the tax payable.
Subtract TDS: TDS already paid or likely to be deducted should be subtracted.
If the computed tax liability is more than INR 10,000, advance tax has to be paid.
Example for Advance Tax Calculation under the New Tax Regime
Consider Ajay, a freelancer whose gross receipt is estimated to be about INR 20,00,000 for FY 2024-25. His expenses have been estimated to be about INR 12,00,000, and he has investments and insurance payments eligible for deductions under Section 80C and 80D. The advance tax payment calculation would turn out to be as follows:
Particulars | Amount |
Gross Receipts | 20,00,000 |
Less: Expenses | 12,00,000 |
Income from Profession | 8,00,000 |
Interest from Fixed Deposit | 10,000 |
Gross Total Income | 8,10,000 |
Tax Payable | 42,000 |
Add: Education Cess @4% | 1,680 |
Total Tax | 43,680 |
Less: TDS | 30,000 |
Advance Tax Payable | 13,680 |
The advance tax installments would then be divided accordingly.
Advance Tax Payment: How to Pay Online?
Payment of advance tax online is done through the following steps:
Visit the e-filing portal of the Income Tax Department of India.
Click on 'e-Pay Tax' under the 'Quick Links' option.
Provide your PAN, confirm it, and give your mobile number.
Enter OTP sent on your mobile.
Choose the tax applicable under 'Income Tax' and proceed.
Choose the type of payment as '100' for 'Advance Tax for 100'.
Now enter the tax amounts and choose the payment method.
Preview the details of the challan and click on 'Pay Now'.
Keep the tax receipt safely, as the same may be required in future.
What is Advance Tax Late Payment Interest?
Interest on late payments of advance tax is charged u/s 234B and 234C as under:
Section 234B : Interest at 1% per month is levied, if 90% of the tax liability is not paid by March 31.
Section 234C: Interest is charged at 1% per month for delays in the quarterly installments.
Tax Payable v/s Tax Refundable
This implies that after paying advance tax, if excess or short tax is determined at the end of the financial year after getting credited from TDS and advance tax paid then the assessee has tax payable or tax refundable. The adjustment surely secures the truth of tax payment, and the lump sum payments are done away with.
Benefits of Advance Tax Payment
Paying advance tax benefits the government and taxpayers.
For the Government: Ensures the continuous flow of payment throughout the year.
For Taxpayers: Reduces the stress of a huge lump sum reversal of tax at year-end and prevents even the slightest interest rate or penalties imposed on the grounds of default or delay in the payment of tax.
Advance Tax Payment Status Check
You can check the status of your advance tax payment through the following:
Visit TIN NSDL site and use CIN-based view.
Enter the details as required.
Click to proceed further and check the status.
Or you may log into your e-filing account at the e-filing portal of the Income Tax Department and check out your Form 26AS.
Making Advance Tax Payments for Unpredictable Incomes
In cases where income is unpredictable (e.g., capital gains or lottery winnings), the advance tax payment should be made in the remaining installments or by March 31 to avoid interest penalties under Section 234C.
Minimum Advance Tax Payment by 31st March
To avoid interest penalties, at least 90% of the total tax liability must be paid by March 31. Otherwise, interest will be charged on the unpaid amount at 1% per month, starting from the due date.
Interest Calculation for Non-Payment of Advance Tax
Interest on non-payment of advance tax is levied at 1% per month under Section 234C. Thus if the amount paid by June 15 is less than 15% of the total liability 1% interest per month for three months would be charged on the deficiency.
How to Write a Cheque for Advance Tax Payment?
At the time of issuing a cheque for advance tax payment, the following points should be kept in mind:
A separate challan is to be used for each type of payment.
Quote your PAN accurately to avoid penalties.
Ensure that the bank's acknowledgement contains BSR code, date of deposit and Challan serial number.
Downloading the Advance Income Tax Challan
To download the advance income tax challan:
Visit the TIN NSDL site and view the CIN-based view.
Now, with all the details, view the challan.
You need to download the challan for reference or can take a printout.
Using the Advance Tax Calculator
TaxBuddy’s Advance Tax Calculator makes advance tax payment calculations quick and simple. By inputting your estimated income, deductions, and existing TDS, it accurately computes your tax liability based on the latest tax slabs. The tool provides a complete breakdown of quarterly payments, ensuring you are aware of how much to pay by each advance tax payment due date. It is designed to accommodate multiple income sources like salary, business, and capital gains, making it perfect for all taxpayers.
With real-time updates, TaxBuddy’s calculator helps you stay compliant and avoid interest penalties under Sections 234B and 234C by paying your advance tax on time.
FAQ
Q1: What is advance tax payment?
Advance tax payment is the tax paid during the financial year, based on your estimated income, instead of paying it all at once at year-end.
Q2: How do I know if I need to pay advance tax?
You need to make an advance tax payment if your total tax liability exceeds INR 10,000 after considering TDS.
Q3: Who is exempt from advance tax payment?
Senior citizens aged 60 and above who do not have business income are exempt from making advance tax payments.
Q4: What happens if I miss an advance tax installment?
If you miss an installment, interest will be charged under Sections 234B and 234C for late or under-payment of advance tax.
Q5: Can I adjust deductions while calculating advance tax?
Yes, deductions under Sections 80C, 80D, and others can be adjusted while calculating your advance tax payment.
Q6: How can I check if my advance tax payment has been credited?
You can check the status through the TIN NSDL site or your Form 26AS on the Income Tax e-filing portal.
Q7: Can I pay advance tax after the due dates?
Yes, you can pay advance tax after the due dates, but you will incur interest under Sections 234B and 234C for late payment.
Q8: How do I pay advance tax on capital gains?
Pay advance tax on capital gains in the remaining installments, or by March 31 if realized late in the financial year.
Q9: Are NRIs required to pay advance tax?
Yes, NRIs with income exceeding INR 10,000 from Indian sources are required to make advance tax payments.
Q10: What if I pay excess advance tax?
Any excess advance tax paid will be refunded by the Income Tax Department, usually after the final assessment of the return.
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