Advance Tax: All You Need to Know

The majority of salaried individuals pay their taxes at the source in the form of TDS (Tax Deducted at Source). However, individuals earning an income through other means in which TDS is not deducted have to pay advance tax.

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Advance Tax Applicability

Also known as “pay as you earn” tax, advance tax has to be paid before the end of your financial year if your tax liability is above Rs. 10,000 for the same.

The following are a few examples where advance tax is applicable:

• Lottery winnings
• Rental income earned from a property
• Capital gains from shares, etc.
• Interest earned from a fixed deposit investment

Advance Tax Schedule

With the effect from 1st June 2016, Advance tax has to be paid four times in a year at the following dates:

• Before 15^th June
• Before 15^th September
• Before 15^th December
• Before 15th March

It’s also important to know the percentage of the total tax amount you have to pay at these dates-

• Before 15^th June: Not less than 15% of the advance tax liability
• Before 15^th September: Not less than 45% of the advance tax liability
• Before 15^th December: Not less than 75% of tax liability
• Before 15th March: 100% of the tax liability

How to pay Advance Tax?

You can pay your advance tax using tax payment challans available at the banks authorized by the Income Tax department such as Allahabad Bank, HDFC Bank, State Bank of India, etc.

You can also pay advance tax online by following these steps:

• Go to https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
• Select “Challan No./ITNS 280”
• Enter your PAN, personal details, assessment year, etc. Under “type of payment” select ADVANCE TAX
• Click “proceed” after which you will be taken to the next page which will display the details given by you. You can confirm these and make the payment online. Also, don’t forget to download the receipt for record purposes.

Payment of advance tax is important and must not be overlooked. Otherwise, you can end up paying a hefty penalty under Section 234C, Section 234B, etc.