Advance Tax: If your tax liability is Rs 10,000 or more, it is mandatory to pay the last installment of advance tax by March 15, 2025. This is an important tax liability under the Income Tax Act, from which the government gets tax in the same financial year in which the income is generated.
Who pays advance tax?
All salaried employees whose income, other than salary, comes from rent, capital gains or interest income.
People involved in business and self-employment also have to pay advance tax.
Senior citizens above 60 years of age, whose income is not from business or profession, are exempted from advance tax.
Salaried employees whose total tax liability is deducted through TDS (Tax Deducted at Source) are not required to pay advance tax.
When is advance tax to be paid?
June 15 – 15% of total tax liability
September 15 – 45% of total tax liability (including first instalment)
December 15 – 75% of total tax liability (including first and second instalment)
March 15 – 100% of total tax liability
How to make payment?
E-payment is mandatory for corporate taxpayers and those taxpayers whose accounts are required to be audited under section 44AB.
Other taxpayers can also make payments online, which will save time and simplify the process.
Penalty for not paying advance tax
If a taxpayer fails to pay the advance tax on time, he or she will have to pay interest under sections 234B and 234C of the Income Tax Act.
Under 234C, if someone does not pay the tax on time, 1% monthly interest will be charged on the outstanding amount.
Under 234B, if 90% of the total tax is not deposited by March 15, interest will be charged on the outstanding amount at the rate of 1% per month till the entire tax is paid.
What to do?
If you have not yet paid advance tax, make your payment before the March 15 deadline to avoid interest and penalty.
