Generally, people are not aware of advance tax & its liability to them because they don’t know What is advance tax actually. Here in this article, we are going to explain to you what is Advance Tax in simple terms and when you are supposed to pay for this.

Advance Tax is basically the Income tax that you have to pay in advance. Yes, as per the government, the Income tax act says if the Income tax payable by you in a year exceeds Rs 10,000 then you are supposed to pay the tax in advance in 4 installments.

Let’s understand with the help of an example-

Suppose Mr. Rahul earns Rs 10,00,000 in a year from his business and now he has to pay income tax on this which will be 1,12,500 which he has to pay as Income tax before filing his Income tax Return. But since the amount of tax exceeds Rs 10,000 then the liability of Advance tax arises on Rahul. He needs to pay all his taxes in advance in four installments as prescribed by law which will be as follows—

Now, Rahul is supposed to pay his income tax in the above-mentioned manner i.e. 15% of the total tax should be deposited to govt before 15^th July of the same financial year, 45% of total tax up to 15^th Sep of FY, to 75% of amount of tax to be deposited before 15^th December and total tax liability should be paid before 31^st March of every financial year.

Now your mind might be thinking a question like How Rahul or anyone will get to know how much profit I will be earning in any financial year ?? Right

The answer as per law is simple, You can not exactly know about the future profits but you have to calculate the liability on an estimated basis. Therefore, Advance Tax is always calculated on Estimated Income for any year. Any short / excess shall be adjusted against the filing of the Income Tax Return. If you have paid Short you need to pay more & if u have paid excess you can get a refund of the same.

Now again Second question arises in your mind, What If I don’t pay such advance tax installments, or what if I missed any installment or paid all at once while filing Income tax? What if I underestimated my Income and then income rises in the next quarters? How will I recalculate this ??

So all these questions are very nominal in your mind & the answer is also here,

Non-payment of Advance tax shall attract interest under section 234B & delay in payment of any installment shall attract interest u/s 234C @ 1% per month for both respectively.

So in the above table, you can understand the burden of interest is for a minimum of 3 months if you miss any of the installment of Advance tax. So plan it as soon as the beginning of the year.

For taxpayers who have opted Presumptive Taxation scheme under Section 44AD & 44ADA-Business Income

For making payment of advance tax you can directly visit the Income tax website Quick Links of E-Pay tax & select Financial Year and can pay tax amount under Income tax head. Link to pay directly

https://eportal.incometax.gov.in/iec/foservices/#/e-pay-tax-prelogin/user-details