Simplify your tax burden: understanding advance tax payments | Fusion - WeRIndia

Advance tax allows taxpayers to pay income tax in instalments throughout the year instead of a lump sum at year-end.

This system benefits both the government and taxpayers, ensuring a steady revenue stream and easing tax burdens.

For the financial year 2024-25, the first advance tax instalment is due on June 15th, 2024., that is today.

Advance tax is paid in four instalments:

• 15% of the total advance tax liability must be paid by 15th June as a first instalment.
• 45% of the total advance tax liability after deducting the first instalment should be paid by 15th September as a second instalment.
• The third instalment includes 75% of the total advance tax liability, that is after deducting both the first and second instalments, whatever is remained, it should be paid as a third instalment by 15th December.
• The fourth instalment includes 100% of the total advance tax liability which should be paid by 15th March.

Any individual whose estimated tax liability is ₹10,000 or more must pay advance tax as per Section 208. This includes individuals and companies like public, private, and one-person companies.

Advance tax is based on the estimated total income for the financial year, including all sources:

• Estimate your total income for the financial year.
• Calculate the income tax on this estimated income using the applicable tax rates.
• Deduct tax deducted at source (TDS) and any other credits from the estimated tax liability.
• The remaining amount is your advance tax to be paid.
• You can pay advance tax online via the Income Tax Department’s website or designated bank branches. Use net banking, debit cards, or visit a bank.

Not paying advance tax on time can incur interest under Sections 234B and 234C of the Income Tax Act for default and deferment.

Senior citizens (aged 60 or above) without income from a business or profession are exempt from paying advance tax.

Tips to Manage Advance Tax:

• Calculate your estimated income accurately to avoid penalties.
• Track due dates to avoid interest charges.
• Use online payment facilities for convenience.

By following these guidelines, you can manage your tax liabilities effectively and avoid unnecessary penalties.

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