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Trusted by 1L+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below
Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below
Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Advance Tax Payment: Due Dates, Calculation, Applicability, and Procedure for FY 2024-25
Advance Tax Payment: Due Dates, Calculation, Applicability, and Procedure for FY 2024-25
Advance tax is a system of tax payment that requires individuals and businesses to pay tax on their income as it is earned, rather than making a lump sum payment at the end of the financial year. This system is designed to ensure that tax obligations are met in a timely manner and to prevent large-scale tax payments during the financial year-end. Advance tax payments are applicable to various sources of income, including but not limited to salaries, rental income, capital gains, lottery winnings, fixed deposits, and other sources of income.
Advance Tax Payment Due Dates for FY 2024-25
Advance tax payments are to be made in four installments throughout the financial year. The specific due dates and the percentage of advance tax to be paid are as follows:
First Installment: On or Before 15th June 2024
Percentage of Advance Tax: 15% of the total advance tax due for the year.
Second Installment: On or Before 15th September 2024
Percentage of Advance Tax: 45% of the total advance tax due for the year, minus any advance tax already paid by June 15.
Third Installment: On or Before 15th December 2024
Percentage of Advance Tax: 75% of the total advance tax due for the year, minus any advance tax already paid by September 15.
Fourth Installment: On or Before 15th March 2025
Percentage of Advance Tax: 100% of the total advance tax due for the year, minus any advance tax already paid by December 15.
For taxpayers opting for the Presumptive Taxation Scheme under sections 44AD and 44ADA:
Due Date for Full Payment: On or before 15th March 2025
Percentage of Advance Tax: 100% of the total advance tax due for the year.
What is Advance Tax?
Advance tax is essentially the income tax that you are required to pay in advance rather than in a lump sum at the end of the financial year. The concept is simple: you pay tax as you earn, rather than waiting until the year’s end. This payment structure helps spread the tax burden throughout the year and ensures that taxpayers do not face a significant financial strain when settling their tax liabilities in one go.
Who Should Pay Advance Tax?
The obligation to pay advance tax extends to various categories of taxpayers:
Salaried Individuals, Freelancers, and Businesses: If your total tax liability is ₹10,000 or more in a financial year, you are required to pay advance tax. This requirement applies universally to all taxpayers, including salaried individuals, freelancers, and businesses.
Senior Citizens: Individuals aged 60 years or more who do not have business income are exempt from paying advance tax. However, senior citizens with business income are still required to fulfill this obligation.
Presumptive Taxation for Businesses: Taxpayers who have opted for the presumptive taxation scheme under section 44AD must pay the entire advance tax in one installment by 15th March. They also have the option to settle all tax dues by 31st March.
Presumptive Taxation for Professionals: Independent professionals such as doctors, lawyers, architects, and others who fall under the presumptive taxation scheme under section 44ADA must also pay their entire advance tax by 15th March. Alternatively, they can settle their tax dues by 31st March.
How to Pay Advance Tax Online?
Paying advance tax online is a straightforward process. Here’s a step-by-step guide:
Visit the Income Tax e-Filing Portal: Go to the e-filing portal of the Income Tax Department of India.
Access e-Pay Tax Option: On the left side of the home page, find the 'Quick Links' section and click on 'e-Pay Tax.' You can also search for 'e-Pay Tax' using the search bar.
Enter PAN and Mobile Number: Provide your PAN (Permanent Account Number) and re-enter it to confirm. Then, enter your mobile number and click on 'Continue.'
Verify OTP: Enter the 6-digit OTP received on your mobile and click 'Continue.'
Select Payment Type: Choose 'Income Tax' as the tax type and click on ‘Proceed.’
Choose Assessment Year and Payment Type: Select the 'Assessment Year' as 2025-26 and 'Type of Payment' as 'Advance Tax (100)' and click 'Continue.'
Fill in Tax Details: Enter the necessary tax details as prompted.
Choose Payment Method: Select your preferred payment method and bank, then click 'Continue.'
Review and Pay: Preview the challan details. Click on ‘Pay Now’ to proceed with the payment. You can also edit the details if necessary.
Save Acknowledgement: After payment, an acknowledgment will be displayed. Note the BSR code and challan serial number. Save this tax receipt for future reference as you will need to enter these details in your tax return.
What is Advance Tax Late Payment Interest?
If advance tax payments are not made on time, interest charges can apply under two sections:
Interest Under Section 234B: If you fail to pay at least 90% of the total tax liability (through advance tax or TDS/TCS) by the end of the financial year, you will be liable to pay interest at the rate of 1% per month on the unpaid amount.
Interest Under Section 234C: This interest is applicable for delays in payment of the advance tax installments. The rates and periods are as follows:
If advance tax paid by June 15 is less than 15%: 1% per month for 3 months on the shortfall.
If advance tax paid by September 15 is less than 45%: 1% per month for 3 months on the shortfall.
If advance tax paid by December 15 is less than 75%: 1% per month for 3 months on the shortfall.
If advance tax paid by March 15 is less than 100%: 1% per month for 1 month on the shortfall.
How is Advance Tax Payment Calculated?
To calculate your advance tax liability, follow these steps:
Estimate Total Income: Calculate your total income for the financial year from all sources including capital gains, rental income, professional income, income from fixed deposits, and salary.
Apply Deductions: Deduct applicable deductions under sections 80C, 80D, etc., from your gross income.
Calculate Tax Payable: Compute the tax payable based on current tax slab rates.
Subtract TDS: Deduct any Tax Deducted at Source (TDS) that has already been deducted or is expected to be deducted.
If the resultant tax liability exceeds ₹10,000 after accounting for TDS, advance tax must be paid.
Example of Advance Tax Calculation
Consider an example to understand advance tax calculation:
Ajay, a freelancer specializing in interior decoration, estimates his annual gross receipts at ₹20,00,000 for FY 2024-25. His estimated expenses are ₹12,00,000. Ajay has also made various investments and payments including ₹40,000 in a PPF account, ₹25,000 towards LIC premiums, and ₹12,000 for medical insurance premiums. Additionally, he expects TDS of ₹30,000 on professional receipts and ₹10,000 in interest from fixed deposits.
Here’s a breakdown of Ajay’s advance tax calculation:
Income Estimation:
Income from Profession:
Gross Receipts: ₹20,00,000
Less: Expenses: ₹12,00,000
Net Income: ₹8,00,000
Income from Other Sources:
Interest from Fixed Deposit: ₹10,000
Gross Total Income: ₹8,10,000
Deductions:
Section 80C:
PPF Contribution: ₹40,000
LIC Premium: ₹25,000
Total Deduction: ₹65,000
Section 80D:
Medical Insurance Premiums: ₹12,000
Total Deductions: ₹77,000
Net Taxable Income: ₹7,33,000
Tax Calculation:
Tax Payable: ₹59,100
Education Cess (4%): ₹2,364
Total Tax Payable: ₹61,464
Less: TDS: ₹30,000
Advance Tax Payable: ₹31,464
Advance Tax Payments:
Due Date: 15th June: 15% of Advance Tax: ₹4,700
Due Date: 15th September: 45% of Advance Tax (minus payment by June 15): ₹9,400
Due Date: 15th December: 75% of Advance Tax (minus payment by September 15): ₹9,400
Due Date: 15th March: 100% of Advance Tax (minus payment by December 15): ₹7,900
Note: The above example uses the old tax regime as it benefits from deductions under section 80C. If the net tax liability is below ₹10,000 after TDS and advance tax deductions, there is no requirement for advance tax payment.
Tax Payable or Refundable
Advance tax payments are designed to prevent a large tax burden at the financial year-end by spreading the payment across the year. After adjusting for advance tax, TDS, and any tax collected at source, you may end up with either a tax payable amount or a tax refund, depending on whether you have overpaid or underpaid your taxes throughout the year.
Related Articles:
Understanding Income Tax Slabs and Rates
How to File Your Income Tax Return Online
Tax Benefits of Various Investment Options
This detailed guide should help you navigate the complexities of advance tax payments, ensuring that you remain compliant and avoid any penalties or interest for late payments.
Advance tax is a system of tax payment that requires individuals and businesses to pay tax on their income as it is earned, rather than making a lump sum payment at the end of the financial year. This system is designed to ensure that tax obligations are met in a timely manner and to prevent large-scale tax payments during the financial year-end. Advance tax payments are applicable to various sources of income, including but not limited to salaries, rental income, capital gains, lottery winnings, fixed deposits, and other sources of income.
Advance Tax Payment Due Dates for FY 2024-25
Advance tax payments are to be made in four installments throughout the financial year. The specific due dates and the percentage of advance tax to be paid are as follows:
First Installment: On or Before 15th June 2024
Percentage of Advance Tax: 15% of the total advance tax due for the year.
Second Installment: On or Before 15th September 2024
Percentage of Advance Tax: 45% of the total advance tax due for the year, minus any advance tax already paid by June 15.
Third Installment: On or Before 15th December 2024
Percentage of Advance Tax: 75% of the total advance tax due for the year, minus any advance tax already paid by September 15.
Fourth Installment: On or Before 15th March 2025
Percentage of Advance Tax: 100% of the total advance tax due for the year, minus any advance tax already paid by December 15.
For taxpayers opting for the Presumptive Taxation Scheme under sections 44AD and 44ADA:
Due Date for Full Payment: On or before 15th March 2025
Percentage of Advance Tax: 100% of the total advance tax due for the year.
What is Advance Tax?
Advance tax is essentially the income tax that you are required to pay in advance rather than in a lump sum at the end of the financial year. The concept is simple: you pay tax as you earn, rather than waiting until the year’s end. This payment structure helps spread the tax burden throughout the year and ensures that taxpayers do not face a significant financial strain when settling their tax liabilities in one go.
Who Should Pay Advance Tax?
The obligation to pay advance tax extends to various categories of taxpayers:
Salaried Individuals, Freelancers, and Businesses: If your total tax liability is ₹10,000 or more in a financial year, you are required to pay advance tax. This requirement applies universally to all taxpayers, including salaried individuals, freelancers, and businesses.
Senior Citizens: Individuals aged 60 years or more who do not have business income are exempt from paying advance tax. However, senior citizens with business income are still required to fulfill this obligation.
Presumptive Taxation for Businesses: Taxpayers who have opted for the presumptive taxation scheme under section 44AD must pay the entire advance tax in one installment by 15th March. They also have the option to settle all tax dues by 31st March.
Presumptive Taxation for Professionals: Independent professionals such as doctors, lawyers, architects, and others who fall under the presumptive taxation scheme under section 44ADA must also pay their entire advance tax by 15th March. Alternatively, they can settle their tax dues by 31st March.
How to Pay Advance Tax Online?
Paying advance tax online is a straightforward process. Here’s a step-by-step guide:
Visit the Income Tax e-Filing Portal: Go to the e-filing portal of the Income Tax Department of India.
Access e-Pay Tax Option: On the left side of the home page, find the 'Quick Links' section and click on 'e-Pay Tax.' You can also search for 'e-Pay Tax' using the search bar.
Enter PAN and Mobile Number: Provide your PAN (Permanent Account Number) and re-enter it to confirm. Then, enter your mobile number and click on 'Continue.'
Verify OTP: Enter the 6-digit OTP received on your mobile and click 'Continue.'
Select Payment Type: Choose 'Income Tax' as the tax type and click on ‘Proceed.’
Choose Assessment Year and Payment Type: Select the 'Assessment Year' as 2025-26 and 'Type of Payment' as 'Advance Tax (100)' and click 'Continue.'
Fill in Tax Details: Enter the necessary tax details as prompted.
Choose Payment Method: Select your preferred payment method and bank, then click 'Continue.'
Review and Pay: Preview the challan details. Click on ‘Pay Now’ to proceed with the payment. You can also edit the details if necessary.
Save Acknowledgement: After payment, an acknowledgment will be displayed. Note the BSR code and challan serial number. Save this tax receipt for future reference as you will need to enter these details in your tax return.
What is Advance Tax Late Payment Interest?
If advance tax payments are not made on time, interest charges can apply under two sections:
Interest Under Section 234B: If you fail to pay at least 90% of the total tax liability (through advance tax or TDS/TCS) by the end of the financial year, you will be liable to pay interest at the rate of 1% per month on the unpaid amount.
Interest Under Section 234C: This interest is applicable for delays in payment of the advance tax installments. The rates and periods are as follows:
If advance tax paid by June 15 is less than 15%: 1% per month for 3 months on the shortfall.
If advance tax paid by September 15 is less than 45%: 1% per month for 3 months on the shortfall.
If advance tax paid by December 15 is less than 75%: 1% per month for 3 months on the shortfall.
If advance tax paid by March 15 is less than 100%: 1% per month for 1 month on the shortfall.
How is Advance Tax Payment Calculated?
To calculate your advance tax liability, follow these steps:
Estimate Total Income: Calculate your total income for the financial year from all sources including capital gains, rental income, professional income, income from fixed deposits, and salary.
Apply Deductions: Deduct applicable deductions under sections 80C, 80D, etc., from your gross income.
Calculate Tax Payable: Compute the tax payable based on current tax slab rates.
Subtract TDS: Deduct any Tax Deducted at Source (TDS) that has already been deducted or is expected to be deducted.
If the resultant tax liability exceeds ₹10,000 after accounting for TDS, advance tax must be paid.
Example of Advance Tax Calculation
Consider an example to understand advance tax calculation:
Ajay, a freelancer specializing in interior decoration, estimates his annual gross receipts at ₹20,00,000 for FY 2024-25. His estimated expenses are ₹12,00,000. Ajay has also made various investments and payments including ₹40,000 in a PPF account, ₹25,000 towards LIC premiums, and ₹12,000 for medical insurance premiums. Additionally, he expects TDS of ₹30,000 on professional receipts and ₹10,000 in interest from fixed deposits.
Here’s a breakdown of Ajay’s advance tax calculation:
Income Estimation:
Income from Profession:
Gross Receipts: ₹20,00,000
Less: Expenses: ₹12,00,000
Net Income: ₹8,00,000
Income from Other Sources:
Interest from Fixed Deposit: ₹10,000
Gross Total Income: ₹8,10,000
Deductions:
Section 80C:
PPF Contribution: ₹40,000
LIC Premium: ₹25,000
Total Deduction: ₹65,000
Section 80D:
Medical Insurance Premiums: ₹12,000
Total Deductions: ₹77,000
Net Taxable Income: ₹7,33,000
Tax Calculation:
Tax Payable: ₹59,100
Education Cess (4%): ₹2,364
Total Tax Payable: ₹61,464
Less: TDS: ₹30,000
Advance Tax Payable: ₹31,464
Advance Tax Payments:
Due Date: 15th June: 15% of Advance Tax: ₹4,700
Due Date: 15th September: 45% of Advance Tax (minus payment by June 15): ₹9,400
Due Date: 15th December: 75% of Advance Tax (minus payment by September 15): ₹9,400
Due Date: 15th March: 100% of Advance Tax (minus payment by December 15): ₹7,900
Note: The above example uses the old tax regime as it benefits from deductions under section 80C. If the net tax liability is below ₹10,000 after TDS and advance tax deductions, there is no requirement for advance tax payment.
Tax Payable or Refundable
Advance tax payments are designed to prevent a large tax burden at the financial year-end by spreading the payment across the year. After adjusting for advance tax, TDS, and any tax collected at source, you may end up with either a tax payable amount or a tax refund, depending on whether you have overpaid or underpaid your taxes throughout the year.
Related Articles:
Understanding Income Tax Slabs and Rates
How to File Your Income Tax Return Online
Tax Benefits of Various Investment Options
This detailed guide should help you navigate the complexities of advance tax payments, ensuring that you remain compliant and avoid any penalties or interest for late payments.
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