The advance tax deadline is nearing and taxpayers with an income tax liability exceeding Rs 10,000 must pay advance tax by December 15. This “pay-as-you-earn” tax applies to individuals, businesses, and salaried professionals whose post-TDS liability crosses the mark. It is important to pay advance tax beforehand to avoid penalties.
According to Section 208 of the Income Tax (IT) Act, 1961, taxpayers with an estimated tax liability of over ₹10,000 in a year, are required to pay tax in installments in the form of advance tax.
Senior citizens, i.e., taxpayers above the age of 60 years during the current financial year, who do not have any income from a job or a business, are exempted from this tax. As per the norms, liable taxpayers who fail to make advance tax payments before the due date will face a penalty interest of 1 per cent per month.
What is ‘Advance tax’?
Advance tax, or “pay as you earn” tax, is income tax paid in installments throughout the year instead of at the end of the fiscal year. Salaried individuals must also pay advance tax if their liability after accounting for Tax Deducted at Source (TDS) exceeds Rs 10,000.
The payment under the Advance tax will be done in four installments:
- By June 15: 15% of the tax liability
- By September 15: 45% of the tax liability (adjusted for prior payments)
- By December 15: 75% of the tax liability
- By March 15: 100% of the tax liability
How to pay advance tax?
- Go to the official Income Tax Department website: www.incometax.gov.in
- Log in using your PAN and password.
- Now go to the e-pay tax section on the portal
- Select the financial year 2024-25
- Now, select “Advance Tax (100)” as the payment type
- Use the available payment option as per your feasibility
- Pay and download the receipt