Second chance for those who missed advance tax payment deadline of Dec 15

What is advance tax?

The IT Act makes it mandatory for individuals, professionals and corporates to pay advance tax if the estimated tax liability after adjusting TDS is R10,000 or more during the financial year. Hence, if you earned interest income, commission, rent, business income, etc, then you are required to pay advance tax.

For example, Deshmukh earns salary income, bank interest and rental income. TDS has been deducted on his salary income, but no taxes were deducted on bank interest and rental income. Taking this into consideration, Deshmukh calculates his estimated tax liability on other incomes, which comes to R30,000. Hence, this liability of R30,000 will be required to be paid as advance tax.

If you have missed the due date of December 15 for the payment of second installment, you still have an option. The IT Act contains a provision whereby the balance advance tax liability can be deposited by March 15. However, interest of 1% per month will be required to be paid for every month during which the default continues.

The interest will be calculated for six months if the advance tax due has not been paid by September 15 and three months if it has not been paid by December 15.

In the above example, suppose Deshmukh paid R9,000 (30% of R30,000)

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