Advance income tax, also known as ‘pay as you earn’, is when you pay your tax liabilities in the same year. However, you don’t pay in lump sum but rather in instalments. You can easily pay the tax online through the official website of the Income Tax Department.
Additionally, there are certain terms and conditions on who is liable to pay advance tax and how it is calculated. Read on to learn more.
You must pay advance income tax in case you fall under any of the following:
Being aware of the due dates is essential to steer clear of late payment penalties and other consequences. Refer to the following table for the due dates for FY 2024-25:
| Due Date | Advance Tax Payment Percentage |
|---|---|
| On or before 15th June | 15% of advance tax |
| On or before 15th September | 45% of advance tax (-) advance tax already paid |
| On or before 15th December | 75% of advance tax (-) advance tax already paid |
| On or before 15th March | 100% of advance tax (-) advance tax already paid |
| On or before 15th March | 100% of advance tax (Presumptive Taxation Scheme u/s 44AD and 44ADA – business and professional income) |
Also Read: What Is Self-Assessment Tax?
If you are wondering how advance tax is calculated, follow these simple steps to compute the tax outgo:
Also Read: Calculation Of Tax
Follow these simple steps to make the payment after advance tax computation:
Also Read: Taxable Income Slabs for FY 2024-25
Here is the interest calculation on advance tax in case of delayed or no payments:
As per Section 234B, you need to pay a minimum of 90% of the total tax obligation as advance tax or TDS/TCS by 31st March. If you fail to pay the tax, an interest of 1% will apply on the unpaid amount.
| Particulars | Rate of Interest | Period of Interest | Amount on which interest is calculated |
|---|---|---|---|
| If Advance Tax paid by 15th June is less than 15% | 1% per month | 3 months | 15% of Amount* (-) tax paid before June 15 |
| If Advance Tax paid by 15th September is less than 45% | 1% per month | 3 months | 45% of Amount* (-) tax paid before September 15 |
| If Advance Tax paid by 15th December is less than 75% | 1% per month | 3 months | 75% of Amount* (-) tax paid before December 15 |
| If Advance Tax paid by 15th March is less than 100% | 1% per month | 1 month | 100% of Amount* (-) tax paid before March 15 |
With this information in hand, you can easily pay your taxes on time and avoid the penalties associated with late payments. In case you need financial assistance for any planned or unforeseen expenses, consider getting an Instant Cashl Loan from Fibe. Get the required funding at pocket-friendly interest rates and minimal formalities.
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The interest rate of advance tax is applicable at 1% per month in case of delayed or no payments. The amount on which interest is calculated depends on the dues.
It is when you clear your tax liabilities during the year in which you incur it. You pay it only if your estimated tax is more than ₹10,000.
The interest rate for both is 1% per month but 234B is applicable when you don’t pay the advance tax even after the financial year ends. 234C is applicable when you don’t pay the advance tax on time during the financial year.
The advance tax computation period is the financial year for which you will file the return.
