Advance tax payment: Who should pay, due dates, how to calculate
The rationale for advance tax is that these payments should be made by taxpayers in line with income that is earned throughout the financial year. It is important to understand the advance tax payment process for individuals and businesses to manage their finances efficiently and avoid penalties.Who should pay?
Salaried individuals, freelancers and businesses with tax liability exceeding Rs.10,000, after reducing TDS, for the financial year, are required to pay advance tax. The tax is computed on the income earned during the year and is paid in instalments as per the designated due dates.
Due dates
For individuals and businesses not covered under the presumptive taxation scheme, advance tax is payable as follows:
15 Jun: 15% of total tax liability.15 Sept: 45% of total tax liability.15 Dec: 75% of total tax liability.15 Mar: 100% of total tax liability.Calculation of tax
Advance tax is calculated on the estimated income for the financial year. Estimated total income — Deductions — Exemptions = Taxable income. It is computed as per the applicable income tax slab rate for individuals or corporate tax rate for businesses.
How to pay tax
The payment can be done both online and offline. For online payments, taxpayers can use the Income-tax Department e-payment portal or authorised bank facilities. Offline payments can be made by submitting the challan at designated bank branches.
Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
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This story originally appeared on: India Times - Author:Faqs of Insurances
