Advance Tax Payment: Everything You Need to Know

Advance tax, also known as “pay-as-you-earn” tax, applies to individuals and businesses whose tax liability exceeds ₹10,000 in a financial year. Here’s a detailed guide to help you understand the process, deadlines, and implications of advance tax payment.

What is Advance Tax?

Advance tax is the tax you pay in installments throughout the financial year instead of waiting until the end of the year. It ensures that taxpayers contribute to government revenue in a timely manner, reducing the burden of a lump sum payment later.

Who Should Pay Advance Tax?

1. Individuals earning income from:
   • Salary
   • Rent
   • Freelancing
   • Business profits
   • Capital gains
   • Interest income
2. Businesses under both normal and presumptive tax schemes.

Due Dates for Advance Tax FY 2024-25

• 1st Installment: 15th June (15% of total tax liability)
• 2nd Installment: 15th September (45% of total tax liability)
• 3rd Installment: 15th December (75% of total tax liability)
• 4th Installment: 15th March (100% of total tax liability)

How to Calculate Advance Tax?

1. Estimate your total annual income from all sources.
2. Deduct eligible deductions (Section 80C, 80D, etc.).
3. Compute total taxable income and apply the relevant tax slab rates.
4. Subtract TDS/TCS or any taxes already paid.

How to Pay Advance Tax?

1. Online:
   • Visit the Income Tax e-filing portal.
   • Use Form 280 to deposit advance tax.
2. Offline:
   • Visit any designated bank branch authorized to collect taxes and fill out Form 280.

Penalties for Late Payment of Advance Tax

1. Under Section 234B:
   • If 90% of the total tax liability is not paid by the financial year-end, interest at 1% per month is levied on the pending amount.
2. Under Section 234C:
   • Interest at 1% per month is charged for non-payment or underpayment of advance tax installments.

Benefits of Paying Advance Tax

• Avoid penalties and interest.
• Stay compliant with income tax regulations.
• Easier cash flow management by breaking tax payments into smaller installments.

Quick Tips to Avoid Penalties

• Set reminders for advance tax due dates.
• Keep track of your income and TDS throughout the year.
• Use an income tax calculator for accuracy.
• Consult a tax professional if you’re unsure about calculations.

Need Help with Advance Tax?

At QuickComply, we make tax compliance hassle-free. From calculating your advance tax to assisting with payments, our team of professionals ensures you stay on top of your tax obligations.

📞 Contact us today for expert guidance!