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Advance Income tax in India

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Advance Tax

  • No Advance Tax need to be paid, if total tax payable for the year is less than Rs. 5,000.
  • When employer deducts tax from Salary, employee need not pay Advance Tax.
  • Non-payment or short payment of Advance Tax will attract penal interest.

What if you don’t pay advance tax?

There are penalties in the form of interest payments to the taxman. But before worrying about penalties, find out if you are liable to pay advance tax. You don’t have to pay tax in advance if your tax liability is Rs 5,000 or less after reducing the tax deducted at source (TDS) from the total tax payable. Thus, if you are a male below 65 years of age and expect to earn Rs 2 lakh this year, an amount on which the tax payable is Rs 15,300, and the tax deducted at source is Rs 10,301, then the balance payable is Rs 4,999. Since this amount is less than Rs 5,000, you won’t have to pay any advance tax during the year. However, in cases where your tax liability is more than Rs 5,000 after deducting the TDS from your gross tax liability, you will have to pay tax in three instalments.

advance tax is payable in three instalments

Let’s take a look at the instalments and the percentage of tax payable: Advance tax instalments (Section 211)

In the case of individuals, the advance tax is payable in three instalments:

  • First instalment by September 15 At least 30 per cent of total amount.
  • Second instalment by December 15 At least 60 per cent of total amount, less amount paid in first instalment.
  • Third instalment by March 15 100 per cent (total amount), less amount paid in the first two instalments.

See also

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