Everything You Need to Know About Advance Tax in India
  The Income Tax Act requires citizens of India to deposit tax in advance, on an installment basis rather than a lump sum payment at the end of the financial year. Section 208 of the Income Tax Act provides for the calculation and payment of advance tax, while Section 234C provides for penalties for delay in payment of advance tax. In this article, we will understand how to calculate advance tax liability, due dates, and the procedure for making advance tax payments in India.

Who is liable to pay Advance Tax?

As per provisions of Section 208, any person (being an individual or a partnership firm or an LLP or a Company or a Firm, or a Trust), whose estimated tax liability after deducting TDS credit and reliefs under income tax act, exceeds Rs. 10,000, shall be liable to pay advance tax. However, Senior citizens (an individual having an age of more than 60 years) are exempt from the payment of Advance Tax, if they are not having any income from a business or profession.

How is advance tax calculated?

Here's how the amount of advance tax to be paid is calculated:
Income tax on estimated taxable income XXXX
Less: - Relief under section 87A (XXXX)
Income Tax, Net of Relief u/s 87A XXXX
Add: Surcharge on Estimated Taxable Income XXXX
Tax Liability XXXX
Add: Edu. Cess & SHEC XXXX
Total Tax Liability XXXX
Less: Relief other than Relief u/s 87A, if any XXXX
Less: TDS as per Form 26AS XXXX
Advance tax Liability XXXX
 

Due Dates for Payment of Advance Tax

As per provisions of Section 211(1)(a) of the Income Tax Act, all assesses shall deposit Advance tax in the following installments-
Due Dates of installments Amount Payable
On or before 15th June 15% of estimated advance tax liability
On or before 15th September 45% of estimated advance tax liability less advance tax paid in an earlier installment
On or before 15th December 75% of estimated advance tax liability less advance tax paid in earlier installments
On or before 15th March 100% of estimated advance tax liability less advance tax paid in earlier installments
  Note: In the case of the assessee who is filing an income tax return on a presumptive basis under section 44AD or 44ADA or tax on higher income than a specified percentage of 6%,8%, or 50% as the case may be, the due date for payment of entire advance tax is 15th March of the financial year.  

How to Pay Advance Tax?

Online Payment
  • Visit http://www.tin-nsdl.com and go to Services > E-payment
  • Select Challan ITNS 280
  • Please fill in the required details in the challan (Please select Advance Tax check box)
  • After filling in all necessary details, you will be directed to the net banking site of your bank.
  • Post Login to your net banking portal, enter payment details.
  • Upon successful payment, a challan counterfoil will be generated containing CIN, payment details, and bank name.
Offline/Paper mode payment
  •  Download Challan ITNS 280 form, by clicking here.
  • Take the printout of this Challan.
  • Fill in the necessary details in the challan (Please tick Advance Tax check box)
  • Submit the challan along with cash or cheque at a nearby bank branch that receives income tax payments.
 

Penalty for Non-payment or delayed payment of Advance Tax

If you miss the dates for payment of advance tax, you will be levied interest under sections 234B and 234C of the Income Tax Act. As per provisions of Section 234B, if an assessee fails to pay at least 90% of the assessed tax liability, then the assessee shall pay Interest at 1% per month or part of a month for the period starting the first day of the assessment year till the date of determination of income u/s 143(1) or when regular assessment is made. As per provisions of Section 234C, if an assessee fails to pay Advance Tax installment before the due date, then the assessee shall pay Interest at 1% per month or part of a month for a period of 1 month in case of shortfall in payment of the last installment and for a period of 3 months in case of shortfall in payment of 1st, 2nd, and 3rd installments.

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