If you are a taxpayer and you have advance tax liability, you should take special care of June 15. This is the last date for depositing advance tax. If you do not deposit your tax on time, it can cost you dearly. Advance tax is the amount of income tax that is paid in advance instead of a lump sum payment at the end of the year. It is also known as income tax. Advance tax is paid in installments as per the due dates fixed by the Income Tax Department.
Who has to deposit advance tax
Every taxpayer having an estimated tax liability of ₹ 10,000 or more in a financial year is required to pay advance tax. According to ICICI Bank, salaried individuals can pay advance tax on income earned from their jobs. Freelancers can pay advance tax on their various sources of income earned throughout the year. Businessmen can pay advance tax on income earned through their company under the taxation scheme of Section 44AD. Senior citizens who have earned income from business in a financial year are required to pay advance tax.
Important dates for depositing advance tax
Advance tax has to be paid throughout the year by the due dates. 15% on or before 15 June, 45% on or before 15 September, 75% on or before 15 December and 100% on or before 15 March.
Why is it important to pay advance tax
According to ICICI Bank, advance tax is income tax paid in advance for income earned in a particular financial year. Normally, tax must be paid when the income is earned. However, under the tax provisions of advance tax, the payer has to estimate the income for the entire year. And based on this estimate, tax is paid at certain time intervals. It is important that the taxpayer estimates the income and then calculates the estimated tax on it to know whether he needs to pay advance tax or not and how much.
How much does it cost to miss a deadline
As per Section 234B of the Income Tax Act, you are required to pay at least 90% of your total tax due by way of advance tax or tax deducted at source/tax collected at source (TDS/TCS) by March 31. If you fail to pay the advance tax, you will have to pay interest at the rate of 1% on the unpaid amount under Section 234B.
