Kind Attention Taxpayers! The last instalment of Advance Tax for FY 2024-25 is due by 15th March 2025.

Paying on time not only upholds your compliance with tax regulations but also strengthens the ‘Viksit Bharat Movement’, contributing to India’s vision of self-reliance and prosperity.

Due Dates for Advance Tax
✅ 15% by June 15
✅ 45% by September 15
✅ 75% by December 15
✅ 100% by March 15

Advance Tax Payment: A Comprehensive Guide

What is Advance Tax?

Advance tax is the income tax that individuals and businesses are required to pay in installments throughout the financial year instead of making a lump sum payment at the end. It is also known as “pay-as-you-earn” tax and is applicable when the total tax liability exceeds a specified threshold set by the tax authorities.

Who Needs to Pay Advance Tax?

The following entities are liable to pay advance tax:

  1. Salaried Individuals: If they have additional income sources like rental income, capital gains, or business income exceeding the tax limit.
  2. Self-Employed Professionals: Freelancers, consultants, doctors, lawyers, and other professionals with taxable income.
  3. Businesses: Sole proprietorships, partnerships, and companies generating taxable income.
  4. Senior Citizens: Individuals aged 60 years and above are exempt if they do not have business income.

Advance Tax Payment Due Dates

The due dates for advance tax payments vary by country, but generally, they follow this structure:

  • 15% of total tax liability – By June 15
  • 45% of total tax liability – By September 15
  • 75% of total tax liability – By December 15
  • 100% of total tax liability – By March 15

For businesses opting for the Presumptive Tax Scheme, the entire tax is typically paid in a single installment by March 15.

How to Calculate Advance Tax?

To calculate advance tax, follow these steps:

  1. Estimate Total Income: Add up all income sources such as salary, business profits, rental income, interest, or capital gains.
  2. Deduct Allowable Expenses and Deductions: Include tax exemptions, deductions (like Section 80C, 80D), and rebates.
  3. Compute Taxable Income: Subtract deductions from total income to get taxable income.
  4. Apply Income Tax Slabs: Use applicable tax rates to calculate the tax liability.
  5. Subtract TDS (Tax Deducted at Source): If any tax has already been deducted at source, reduce it from the computed tax.
  6. Divide as per Due Dates: Pay the remaining tax liability in installments based on the schedule.

How to Pay Advance Tax?

Advance tax can be paid online or offline:

  • Online: Through the government’s tax portal using net banking, debit/credit cards, or UPI.
  • Offline: By visiting designated bank branches and submitting the challan.

Penalty for Non-Payment or Late Payment

Failure to pay advance tax or short payments attract interest penalties under tax laws. The common penalties include:

Benefits of Paying Advance Tax

  1. Avoids Last-Minute Tax Burden: Distributes the tax liability across the year.
  2. Reduces Interest and Penalties: Timely payments prevent extra charges.
  3. Smooth Cash Flow Management: Helps businesses and individuals plan finances efficiently.
  4. Compliance with Tax Laws: Ensures tax obligations are met as per regulations.

Conclusion

Advance tax payment is a crucial aspect of tax compliance for businesses and individuals with substantial income. Proper planning and timely payments help avoid penalties while ensuring financial discipline. Taxpayers should regularly assess their earnings and adjust their payments accordingly to stay compliant with tax regulations.