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Advanced Tax Payment: Meaning, Due Dates, Applicability & Payments

Written by: CHETNAA GOYAL Posted on: 2 November, 2022

Advance Tax Understanding the Basics and Meeting Your Tax Obligations

As per section 208, every person whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance, in the form of “advance tax”. In this part you can gain knowledge on various provisions relating to payment of advance tax by a taxpayer.

Person not liable to pay advance tax

As discussed above, every person whose estimated tax liability for the year is Rs. 10,000 or more is liable to pay advance tax. However, a resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession is not liable to pay advance tax.

Due dates for payment of advance tax

Advance tax is to be paid in different instalments. The due dates for payment of different instalments of advance tax except the eligible assessee as referred to in Section 44AD or section 44ADA are as follows:

	Due Date	Advance Tax Payable
1.	On or before 15th June	15%
2.	On or before 15th September	45%
3.	On or before 15th December	75%
4.	On or before 15th March	100%

Advance tax payment by assessees computing profits on presumptive basis under section 44AD(1) or section 44ADA(1)

An eligible assessee, opting for computation of profits or gains of business or profession on presumptive basis in respect of eligible business referred to in section 44AD(1) or in respect of eligible profession referred to in section 44ADA(1), shall be required to pay advance tax of the whole amount on or before 15th March of the F.Y.

Mode of payment of advance tax

Any other taxpayer can pay tax either by electronic mode or by physical mode i.e. by depositing the challan at the receiving bank.
Challan No. ITNS 280 is the form that needs to be duly filed on the prescribed due dates.

Pre-requisites of Challan No. ITNS 280 are

PAN Details: Carefully publish correct PAN details, or else your tax will be deposited in someone else’s name.
Assessment Year: Select the correct assessment year for which the tax is to be paid as it is going out in advance for the upcoming financial year.
Selecting the type of payment: The taxpayer has to select the type of payment in the form. If the tax is being paid for the same financial year based on the estimated income- it would be advance tax. If the tax is being paid after the end of the financial year – it would be self-assessment tax.

Steps to Calculate Advance Tax

Estimate your total income from all sources earned from 1 April - 31st March
Subtract the total tax-deductible expenses/investments
Compute tax on such Income.
Reduce the amount of tax paid by way of TDS/TCS.
What you get is your advance tax liability. Now you need to pay advance tax in installments.

How to Pay Advance Tax Online 2023

The advance tax can be paid online through the online facility offered by the Income Tax department. Listed below are the steps that need to be followed to make a successful online payment for advance tax.

Step 1: Visit the official Website of the Income Tax Department

Step 2: Click 'e-pay Tax' option under 'Quick Links'

Step 3: Now, Enter your 'PAN' and 'Mobile Number'. Click on 'Continue'

Step 4: Enter the 'OTP' received on your Mobile and Click on 'Proceed'

Step 5: Select First Tab i.e 'Income Tax' Option and 'Continue'

Step 6: You'll have to fill in details such as the right assessment year, address, phone number, email address, bank name, captcha code and other details.

Step 5: Once you are done filling in the details, you'll be redirected to the bank's Net Banking page.

Step 6: Next, you'll get details of your payment including your challan number.

Step 7: It is important to report your payment after you've made the payment.

What is the penalty for missing the dates of payment of Advance Tax?

If you miss the dates for payment of advance tax you will be levied interest under section 234B and 234C of the Income tax Act.

Section 234B Interest for defaults in payment of advance tax

This interest levied in two cases

If the Assessee was liable to pay advance tax, but failed to deposit that.
If the amount deposited was less than 90% of the tax to be deposited.
In both the above cases, assessee will be levied a Simple Interest @ 1% per month or part of the month. Please remember, in case the advance tax deposited was more than 90% of the total tax, then no interest will be charged. This interest is chargeable from 1st April of the Assessment Year.

Section 234C: Payment of Advance tax not in time or Interest for deferment of advance tax

If an assessee who is liable to pay advance tax (other than an assessee who declares profits and gains in accordance with the provisions of section 44AD(1) or section 44ADA(1)) fails to pay such tax or, the advance tax paid by such assessee on its current income on or before the dates specified in the table below is less than the specified percentage of tax due on returned income, then simple interest @1% per month for the period specified in the table on the amount of tax due will be charged

Specified date	Specified%	Shortfall in advance tax	Period
(1)	(2)	(3)	(4)
15^th June	15%	15% of tax due on returned income (-) advance tax paid up to 15^th June	3 months
15^th September	45%	45% of tax due on returned income (-) advance tax paid up to 15^th September	3 months
15^th December	75%	75% of tax due on returned income (-) advance tax paid up to 15^th December	3 months
15^th March	100%	100% of tax due on returned income (-) advance tax paid up to 15^th March	1 month

Note – However, if the advance tax paid by the assessee on the current income, on or before 15th June or 15th September, is not less than 12% or 36% of the tax due on the returned income, respectively, then, the assessee shall not be liable to pay any interest on the amount of the shortfall on those dates.

Example

Mr. A has Estimated Total Income for F.Y 2022-23 is	Rs. 10,00,000
Deductions under Chapter VI A is	Rs. 1,50,000
Total Income (1000000 - 150000)	Rs. 8,50,000
Tax on total income	Rs. 85,800
TDS Deducted	Rs. 50,000
Net Tax Liability	Rs. 35,800
Advance tax already paid	Rs. 16,800
Advance tax paid in 3rd installment	75%

75% of 35800 Rs. 26850

Already paid Rs. 16800

Rest need to be paid Rs. 10050

Frequently Asked Questions (FAQ's)

a. Is a Resident senior citizen granted exemption from payment of advance tax?

As per section 208, every person whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance, in the form of "advance tax". However, section 207 gives relief from payment of advance tax to a resident senior citizen. As per section 207 a resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession, is not liable to pay advance tax.

b. What is the due date for payment of Advance tax ?

The due dates for payment of different instalments of advance tax are as follows :-

(i) For assessees (other than those covered under section 44ADA of the Income-tax Act, 1961)

On or before 15^th June	15% of advance tax
On or before 15^th Sept	45% of advance tax
On or before 15^th Dec	75% of advance tax
On or before 15^th March	100% of the advance tax

(ii) For assessees covered under section 44AD and section 44ADA (under presumptive taxation scheme) of the income-tax Act, 1961, are required to pay advance tax on or before 15^th Mar.

c. Which tax rates are to be used for computing advance tax liability?

For computing the advance tax liability of the prevailing tax rates or the rates in force of the previous year for which the advance tax is to be computed are to be used.

d. Does credit of TDS allowed while calculating advance tax?

As per section 208 of the income-tax Act, 1961, every person whose estimated tax liability for the year is INR 10,000 or more, after TDS (taxes deducted at source), shall pay advance tax.

Therefore, credit of TDS is to be taken while calculating the advance tax liability.

However, if the amount is given or credited by payer without deduction of tax then the benefit of TDS cannot be given while calculating the advance tax liability.

e. Who is not required to pay Advance tax?

A resident senior citizen (i.e., an individual of the age of 60 years or above during the financial year) not having any income from business or profession is not liable to pay advance tax.
Taxpayer who opted for presumptive taxation scheme of section 44AD or section 44ADA is liable to pay 100% of advance tax by 15th March.
Individuals, having only salary income are not required to pay advance tax as the liability to deduct and deposit tax is on the employer.

f. Can payment of advance tax be made through any bank account?

It is not necessary to make the payment of taxes from assessee's own account in an authorized bank.
An assessee can make the payment from account of any person.
However, the challan for making such payment must clearly indicate the Permanent Account Number of assesse on whose behalf the payment is made.

g. Can estimate of income be revised for the purpose of advance tax?

In case the assesee wants to revise the estimate of income after making payment of first/ second instalment of advance tax, the assesse can revise the remaining instalment of advance tax in accordance with his revised estimate of current income and pay the advance tax accordingly.

h. How do advance tax paid get reflected in Form 26AS ?

Once the Advance Tax is paid, it will be reflected on assessee's Form 26AS within 3-4 working days of making the payment.

i. What should we do if the bank is closed on the last day for payment of advance tax?

Any taxes paid till 31^stMarch will be treated as advance tax.
If the last day for the payment of advance tax is the day on which the banks are closed, then one should pay the advance tax on the immediately following working day and no interest shall be charged on such payments of advance tax.

j. What should I do on receiving the notice from income-tax department for the payment of advance tax, if my actual income is more than what is determined by the tax officer?

Assessing Officer can serve an order requiring the assesse to pay advance tax, if he is of the opinion that such person is liable to pay advance tax.

However, if you feel that year advance tax liability is lower than the liability calculated by the income-tax officer, you may file an estimation of the income and amount of tax payable thereon
Such information should be submitted in Form No 28A to the Assessing Officer.
Alternatively, In case the tax demand calculated by the Income-tax officer is lower than the tax liability computed by you, you should pay the advance tax as per your own computation.
No intimation to Income-tax officer is required to be made in such cases.

k. If a person adopts the presumptive taxation scheme of section 44AD, then is he liable to pay advance tax in respect of income from business covered under section 44AD?

Any person opting for the presumptive taxation scheme under section 44AD is liable to pay whole amount of advance tax on or before 15th March of the previous year. If he fails to pay the advance tax by 15th march of previous year, he shall be liable to pay interest as per section 234B and section 234C.

For more details, Please watch our video

If you want to learn how to pay Advance Tax, Click on this video

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CHETNAA GOYAL

FCA, B.COM, More than 10 years of Experience in Direct Tax