Advance tax means income tax paid in advance instead of lump sum payment at year-end. It is also known as pay as you earn tax. These payments have to be made in instalments as per due dates provided by the income tax department.
Who should pay Advance Tax?
Salaried, freelancers and businesses– If your total tax liability is Rs 10,000 or more in a year you have to pay advance tax. The advance tax applies to all taxpayers, salaried, freelancers, and businesses. Senior citizens, who are 60 years or older, and do not run a business, are exempt from paying advance tax.
Presumptive income for Businesses–The taxpayers who have opted for a presumptive taxation scheme under section 44AD have to pay the whole amount of their advance tax in one instalment on or before 15 March. They also have an option to pay all of their tax dues by 31 March.
Presumptive income for Professionals– Independent professionals such as doctors, lawyers, architects etc. come under the presumptive scheme under section 44ADA. They have to pay the whole of their advance tax liability in one instalment on or before 15 March. They can also pay the entire amount by 31 March.
Note if you are having only salary income then you need not to pay tax as your employer deduct tax on your salary. but if you have not declared other income such as interest, rent or business income in that case to avoid the late interest payment you should deposit your advance tax.
When to Pay Advance Tax for FY 2020-21?
Payment of Advance Tax for individuals and corporates
First Instalment- by 15th June every year you have to pay 15% of tax liability.
Second Instalment- by 15th September you have to pay 45% of tax liability.
Third Instalment- by 15th December you have to pay 75% of tax liability.
The fourth Instalment- by 15th March you have to pay 100% of tax liability.
Business/Professional assessee declaring income under the presumptive income scheme u/s 44AD or 44ADA also have to pay the whole of the advance tax by the 15 th March of the Year. However, any amount deposited by 31 st March is treated as the advance tax of that financial year.
How to Pay Advance Tax for FY 2020-21?
Advance tax can be paid online as well as offline. For further information, Click here: To Pay online-
Login to the income tax website www.incometaxindia.com
Click on e-payment of Taxes tab
Now under the Service tab, select e-payment option
To pay advance tax, select Challan 280
Fill in the required details
Choose Netbanking option to pay online
After successful payment, a challan certificate will be displayed which will contain the information number, payment
details and bank name via which e-payment was made.
This certificate is proof of the payment that has been done
To Pay Advance Tax Offline
You have to visit the designated bank branch and fill the challan form and then pay the taxes.
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CA Sunil Sakral, suggest while calculating the advance tax liability one should consider all the deductions from the income. There is no need to pay advance tax if the age of the person is more than 60 years and not doing business.
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