Advance Tax under Income Tax, 1961

1. ADVANCE TAX UNDER INCOME TAX,1961 • https://taxguru.in/income-tax/advance-tax-income-tax-1961.html • What is AdvanceTax? • Tax which paid as you earn is called as advance tax. It is paid in the year in which you earn the income. Particularly a Financial year. For e.g. if you are earning income in the year 2022-23 then it would be a year in which you have to paid advance tax. 2022-23 would be that financialyear. • Who is liable to pay AdvanceTax? • Any person who’s estimated tax liability for the financial year exceeds Rs.10,000/- is required to pay Advance Tax. • When it is to bepaid? • It is to be paid in 4 installments in the financial year. Starting 1st installment on 15th June, 2nd on 15th September, 3rd on 15th December and 4th on 15th March of theyear. • How much is to be paid? • Atleast 90% of the assessed tax (Assessed tax means Total tax less TDS) is to be paid to avoid interest u/s234B. • How it is to bepaid? • It is to be paid asfollows:- • 15% of the total estimated tax on 1stinstallment • 45% of the total estimated tax on 2nd installment i.e. 45% less 15% paid on 1stinstallment • 75% of the total estimated tax on 3rd installment i.e. 75% less 45% paid on 1st and 2ndinstallment • 100% of the total estimated tax on 4th installment i.e. 100% less 75% paid on 1st, 2nd & 3rdinstallment • What are the consequences if it is not paid or shortpaid? • Treated as default u/s 234B and u/s234C • Simple interest @1% from 1st April of the Assessment year to the date of filing of the Return of Income u/s 234B • Simple interest @1% for 3 months in respect of each installment payable on 15th June, 15th Sep and 15th December and @1% on last installment i.e. on 15thMarch

2. Unnecessarily we have to pay interest ontax. • What are the benefits of paying AdvanceTax? • Reduce the burden of paying tax in one go at the time of filing of Return ofIncome. • Save in interest liability which crystallize in case if advance tax not paid or shortpaid • Few Important points tonote:- • Challan No.280 is to be used to pay the AdvanceTax. • Select correct Assessment year corresponding to the financial year for e.g. if FY is 2022-23 then corresponding Assessment year would be2023-24 • The date is near for 1st installment which is due on 15th June for the FY 2022-23. Therefore pay your Advance Tax if you are liable to pay and just berelaxed. • Hope this write-up would help you in some way. You can reach to me atrohanrp1983@gmail.com