Home > Services > Tax > Advance Tax

Advance Tax

Advance tax is a vital component of the taxation framework that ensures a steady revenue inflow for the government and facilitates efficient financial planning for taxpayers. This article provides an in-depth understanding of advance tax, its significance, calculation methods, due dates, and implications for individuals and businesses.

What is an Advance Tax?

Advance tax refers to income tax that is paid upfront for income received within a particular fiscal year. Taxes are typically required when payment is received. However, the payer still needs to project their annual income in compliance with the advance tax requirements, and by this estimation, the tax is paid at specific periods.

Advance Tax Due Dates

The advance tax must be paid in several instalments. The following dates apply to the payment of various advance tax instalments:

Status By 15 June By 15 Sept. By 15 Dec. By 15 March
All assessees (other than the eligible assessee as referred to in section 44AD or section 44ADA) Minimum 15% of Advance tax Minimum 45% of Advance tax Minimum 75% of Advance tax Minimum 100% of Advance tax
Taxpayers who opted for the presumptive taxation scheme of section 44AD or section 44 ADA       NIL       NIL       NIL Minimum 100% of Advance tax

How to Calculate Advance Tax?

The anticipated tax liability for the year must be used to calculate advance tax. Advance tax is due in instalments as shown below:

  1. Except for the eligible assessees mentioned in sections 44AD and 44ADA, in the case of all assessees:
  • Up to 15% – On or before June 15th
  • By or before September 15th, up to 45%
  • Up to 75% – By December 15th or earlier
  • Up to 100% – By the deadline of March 15th
  1. Up to 100% – By March 15th, if the eligible assessee is described in sections 44AD and 44ADA.

Note: Any advance tax paid on or before March 31st will also be considered paid for the current fiscal year.

Liability to Pay Advance Tax

  • According to section 208, every individual whose projected tax due for the year is Rs. 10,000 or more must pay their tax in advance in the form of “advance tax”.  
  • However, a resident senior citizen (i.e., a person who was 60 years of age or older during the relevant financial year) who did not have any company or professional income is not required to pay advance tax.

How to Pay Advance Tax Online?

  • Go to https://www.incometax.gov.in/iec/foportal/#/ to access the e-filing portal. 
  • Click on the “e-Pay Tax” link in the “Quick Links” area on the left side of the main page. ‘e-Pay Tax’ can also be found using the search box.
  • Enter your PAN on this page twice to confirm it.
  • Now, enter your mobile number and then “Continue”.
  • Type in the 6-digit OTP that was sent to your mobile number and click “Continue.”
  • Choose the first box marked “Income Tax” and press “Proceed.”
  • Select the  “Assessment Year” as “2024–25” 
  • Now, select “Type of Payment” as “Advance Tax (100)” and then continue
  • Fill up every tax detail
  • Choose bank and payment option
  • Review the challan information and select “Pay Now.” If necessary, you may also “Edit” these data.
  • You will see an acknowledgement on the following screen once the payment has been made. 
  • Save the tax receipt for further use in future.

Payment of Advance Tax 

The taxpayer has two options for paying advance tax: on his account or in compliance with an Assessing Officer order. The taxpayer is responsible for estimating his current income and paying advance tax on his account if they are liable to do so. In this situation, he is not required to provide the tax authorities with an estimate or statement of revenue.

If the tax liability changes after paying the first, second, or third advance tax instalment (as applicable), the taxpayer may adjust the amount of advance tax in the remaining instalment(s) and pay the tax according to the updated estimates. 

The taxpayer’s projected current income can be taxed at the effective rates for the entire fiscal year. Tax deducted or collected at source will be subtracted from the tax that has been added, and the remaining tax owing will be used to determine the advance tax due. 

Additionally, any tax relief permitted by sections 90 or 90A, any deduction allowed by section 91, or any tax credit that may be offset by either section 115JAA or area 115JD must also be considered when calculating the advance tax liability.

How to Check Advance Tax Payment Status?

  • Visit https://tin.tin.nsdl.com/oltas/index.html 
  • Choose between the TAN-based view or the CIN-based view.
  • Fill up the necessary information to view the Status 
  • Tax Deductors may also download the Challan Details file for a chosen period through the TAN-based view, which will be utilised to check the entries for the Challan made in the e-TDS/TCS Statement.

FAQs on Advance Tax

Is paying tax in advance mandatory?

Taxpayers must pay taxes in advance if they have taxable income from any source not subject to withholding tax or where the taxes are withheld at a reduced rate.

Can I obtain my advance tax refund?

The officer may authorise your tax refund if your advance tax payment balance under Form 26AS exceeds your tax obligation under the submitted ITR. If not, you can submit Form 30 to ask for a comparison of your income tax payments to your liability.

Are Senior citizens who are residents exempted from paying advance tax?

A resident senior citizen who is 60 years of age or older during the relevant financial year and has no income from a business or profession is not required to pay advance tax, according to section 207.

What method is used to pay advance tax?

Online and offline payment options for tax anticipation are available. You can pay your taxes online through the income-tax portal.
On the other hand, if you use the offline option, you must print Challan 280 by entering your information on the website and paying your taxes at the bank counter.

What happens if advance tax is not paid?

According to section 234B, interest is charged at 1% simple interest per month or fraction of a month for failure to pay advance tax. The amount of the unpaid advance tax is assessed with the penalty interest.

Know more about Small Businesses & Tax