Income Tax Payment in Advance – Schedule & Operating Model

Advance tax means income tax should be paid in advance instead of lump sum payment at year-end.
Advance Tax should be calculated by estimating the current year income then applying tax rates.

TDS/ TCS & MAT credit shall be deducted to arrive at Advance Tax Liab.

Adv. Tax payments have to be made in instalments as per due dates as follows:-

  • 15% of Tax Liab. – 15 June (PY)
  • 45% of Tax Liab. – 15 Sept (PY)
  • 75% of Tax Liab. – 15 Dec (PY)
  • 100% of Tax Liab. – 15 Mar (PY)

Note: Tax Paid up to 31st Mar (PY) is treated as advance tax.

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Who Shall Pay Adv. Tax?

The advance tax applies to all taxpayers whether salaried or in business.

If your total tax liability >= Rs 10,000/- in a PY, you have to pay advance tax.

If Assessee opts for S-44AD/ 44ADA (Presumptive PGBP) then the due date of Advance Tax is 15th Mar (PY) [only 1 Installment].

Resident Sr citizens (>=60y age) who do not run a business, are exempt from paying advance tax.

How do I make an advance tax payment?

Advance tax payment is made using Challan 280 just like any other regular tax payment. You may read our detailed article on online payment of income tax.

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Consequences of Delay Payment/ Short payment?

S-234C- Interest for deferment of Advance Tax Installments. No Interest if the assessee has paid adv. Tax up to 12% in 1st Installment, up to 36% in 2nd Installment.

S-234B – Interest imposed for short payment of advance tax. (Not applicable if assessee paid 90% or more of Adv. Tax payable)

Note: If there is a change in Income due to Processing of Return u/s 143(1) or Assessment, then tax as per 143(1)/ Assessed Tax shall be taken instead of tax as per ROI. (Applicable for S-234B)

For further clarification, please refer to the link below:-https://www.incometaxindia.gov.in/tutorials/31.%20provisions%20on%20pymt%20of%20adv.%20tax.pdf