- Have any questions?
Do you have to pay tax in advance? hurry up! The deadline is March 15.
When an income is paid, taxes are usually deducted/collected at the source. However, because not all incomes are subject to TDS and the tax deducted at source may be less than the applicable slab rate, the remaining tax due must be paid in advance. Let’s look at the advance tax provisions that apply to individuals.
Who has to pay advance tax and when do they have to pay it?
Every taxpayer whose tax due, after deducting TDS and TCS, exceeds Rs. 10,000/- is required to pay advance tax in four instalments on the 15th June, 15th September, 15th December, and 15th March of the financial year, in the ratios of 15%, 30%, 30%, and 40%, respectively. Any advance tax shortfall in any of the instalments must be made up in the next instalment. So, if you haven’t made any instalments for the current year, you can discharge your whole advance tax liability by March 15th. The advance tax burden on capital gains and dividends income can be discharged in instalments due after the income is accrued.
Related Article…
[pt_view id=”baa39696xe”]
People who are subject to the presumptive scheme of taxation under Sections 44AD and 44ADA can pay their advance tax in one instalment on March 15th. If you are a senior person with no income from a business or profession, you are free from paying advance tax, which must be paid before the ITR filing deadline.
Interest is due if there is a deficiency or if advance tax is not paid.
You must pay interest of 1% each month for each delay or deficiency in advance tax. Because the next instalment is due after three months, even if you miss the due date by one day, you essentially pay interest for three months. If your advance tax debt is Rs. 1 lakh and you fail to pay the Rs. 15,000/- due on the 15th of June, you will be charged interest of Rs. 450/-, even if you pay it on the 16th of June.
Any advance tax paid by March 31st of the following year is likewise considered advance tax. So, if you fail to pay the advance tax instalment by the 15th of March, or if you pay it on the 15th but still have a shortfall, you can pay it by the 31st of March 2022, but you will have to pay penal interest of 1% for one month in addition to the interest you must pay for any shortfall in previous instalments.
What happens if an advance tax liability is not paid by the financial year’s end on March 31st?
If you are unable to pay the full amount of advance tax, you can pay it under the name of self-assessment tax at a cost. For non-payment or a deficiency in advance tax payment, you must pay interest at 1% per month or part of a month from April 1st of the following year until you really pay the self-assessment tax. If the shortfall does not exceed 10% of your total tax liability, no interest will be charged. This is in addition to the interest that will be charged if advance tax is not paid during the year.
It’s important to remember that if you don’t pay your advance tax on time, you’ll have to pay penalty interest of 1% per month from April 1st to the date of actual payment of self-assessment tax. You’ll also have to pay penalty interest if you file your ITR after the due date, which is usually July 31st for salaried and most tax payers. This interest is payable from the due date of the ITR to the actual filing date of the return. Even if you have already paid your self-assessment tax by the due date for filing your income tax return, you will be charged interest.
What happens if you pay more tax in advance than you owe?
If you pay more tax than your actual tax burden, either through advance tax or TDS, you can seek a refund for the difference, but you’ll have to file an ITR to get it. Furthermore, you are entitled to interest at a rate of 6% per annum on any excess tax paid.