As the name suggests, advance tax refers to paying a part of your taxes before the end of the financial year. You can consider this as pay as your earn tax. The payment of the same can be done as an installments as per the due dates given by the income tax department.

Advance tax is liable for those whose liability is more than 10,000 in a financial year. Advance tax is payable for all the taxpayers, Salaried freelancers & business man. This tax is mainly for those who received income from other sources apart from their salary. This tax is exempted for the senior citizens who are 60years & older & do not run a business.

Advance tax can be paid through different ways its depends on the individual how comfortable he is in doing the payment. Advance Tax can be paid through challans at bank  branches which are authorised by the Income Tax Department either it can be Secured in the respective banks such as ICICI Bank, Reserve Bank Of India,  HDFC Bank, Syndicate Bank & etc.

 Challan No/ ITNS 280

Challan 280 allows people to pay their income tax online on the website of the Income Tax Department of India. On the website, people have to select this challan and fill the form and then use it to pay taxes online/office. If they want to pay the tax offline, they have to download Challan 280 form from the Income tax welcome, fill it and submit it at the bank.

You need to select ITNS 280, choose type of payment as: 100 – Advance tax and proceed with the payment of the advance tax.

The following instructions to be followed while furnishing Challan No/ ITNS 280

  • Tax Applicable
  • Pan no & full Name
  • Assessment year
  • Type of Payment
  • Bank Name
  • Amount of Tax

This few things a taxpayer need to consider if he is going to payment through challan.

Penalty for default or deferred payment of advance tax:

As we all know that if we fail to pay any due on the given time so we have to compensate for that in the same manner if the individual forgets to pay the advance tax by the first deadline, then the individual has to pay interest. The interest is computed as 1% Interest on the defaulted amount for every month until the tax is paid off completely. The same penalty will be forwarded if the individual don’t pay by second or third deadline.

Advance Tax payment Due Dates

The period for the payment of Advance tax is within the gap of 3 months starting from June to March the percentage of the payment also increases according to the date & month in the last month the tax payer has to paid the full installment according to the Indian constitution.

Due Dates

Corporate Assessee

Individual Assesse

On or before 15th June of the financial year

Not less than 15% of total advance tax

Nill

On or before 15th September of the financial year

Not less than 45% of total advance tax

Not less than 30% of total advance tax

On or before 15th December of the financial year

Not less than 75% of total advance tax

Not less than 60% of total advance tax

On or before 15th March of the financial year

Not less than 100% of total advance tax

Not less than 100% of total advance tax

                     

How to calculate Advance Tax

However to calculate any tax there Is some logic or steps behind it. Here also there are 05 steps consider to calculate Advance Tax.

Step 1: Estimate your total Income for the whole financial year.

Step 2:  Calculate your IT liability based on the rates and provisions applicable in a year.

Step 3: Deduct TDS amount as deducted from your source of income to arrive at your net liability.

Step 4: On the net amount you calculate surcharge & education cess as applicable to you

Step 5: Add Step 4 & Step 3 to arrive at your IT Liability

However Step 5 is equal or more than Rs 10,000 then you are liable for advance tax. If it less then Rs 10,000 then no need to pay it. 

 

 

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CA Chirag Chauhan

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