Advance tax payment last day today; here’s how much you have to pay and how to make payment

Published: March 15, 2019 1:56:48 PM

As we approach the end of the financial year, there are a few things we need to strike off our checklist. An important one, which most of us often overlook, is the Advance Tax payment which is due on the 15th of March 2019.

Advance tax is payable in instalments during the same FY in which income is earned.

By Tanvi Loond

As we approach the end of the financial year, there are a few things we need to strike off our checklist. An important one, which most of us often overlook, is the Advance Tax payment which is due on the 15th of March 2019. To understand the importance of pre-paying one’s taxes in advance, one must understand its benefit.

Advance tax falls under the “Pay as you earn” scheme of section 207-211 of the Income Tax Act. Under this scheme, tax is to be paid during the course of earning of income in the current year itself, even though such income is taxed in the following financial year.

Liability to pay Advance Tax

All assesses shall pay advance tax in respect of their total income i.e. income from salary, business, house property, capital gains and other sources. Advance tax shall be payable only if the total tax liability in the current FY is Rs. 10,000 or more.

In case of individuals with salary income, the liability arises if there is income from other sources such as rental income, freelancing revenue, capital gains from sale or property, securities etc.

If salary is the only income, advance tax need not be paid as TDS is already deducted by the employer.

For example, Simran earned income from salary and rent during the Financial Year (FY) 2018-19. This income will be taxed in FY 2019-20 (also called Assessment Year), however, her advance tax becomes payable in the current FY 2018-19.

Exemption

Senior citizens (60 years and above) who are resident in India and do not have business or professional income are exempt from payment of advance tax.

Computation of Advance Tax liability

  • Estimate the total income of the current year
  • Calculate tax on such estimated income at the notified rate(s) of tax
  • Add : surcharge and cess to the amount calculated in step 2 above
  • Less : Relief for salary arrears, double taxation, MAT credit and AMT credit, if applicable (section 89,90,90A &91)
  • Less : Tax deductible or collectable at source (TDS/ TCS)
  • Less : Minimum Alternate Tax (MAT) credit or Alternate Minimum Tax (AMT) credit, if applicable (section 115JAA, 115JD)
  • Balance amount, if Rs. 10,000 or more, is the advance tax payable

Payment and Due date

Advance tax is payable in instalments during the same FY in which income is earned.

Due date of instalment and amount payable:

  • On or before 15th June: 15% of such advance tax
  • On or before 15th September: 45% of such advance tax, as reduced by the amount paid in the earlier instalment
  • On or before 15th December: 75% of such advance tax, as reduced by the amount paid in the earlier instalment(s)
  • On or before 15th March: 100% of such advance tax, as reduced by the amount paid in the earlier instalment(s)

For businesses under presumptive tax scheme (section 44AD and 44ADA), 100% of the advance tax shall be payable in one instalment on or before the 15th of March.

Interest and penalty payable in case of non-compliance

Penalty for default in payment under section 234 B : If Advance tax is not paid or the amount of advance tax paid is less than 90% of the assessed tax, a simple interest @ 1% per month shall be payable from the 1st of April following the FY.

Penalty for short payment under section 234 C : If advance tax paid is less than the stipulated amount, interest under section 234C shall be calculated as tabulated below:

Circumstances in which interest is payable under section 234C

  • Circumstance: If advance tax paid on or before 15th June is less than 12% of tax due
    • Interest Payable: Simple interest @1% per month for 3 months
    • Amount on which interest is to be paid: 15% of tax due minus advance tax paid upto 15th June
  • If advance tax paid on or before 15th September is less than 36% of tax due
    • 100% of tax due minus total advance tax paid upto 15th March
    • 45% of tax due minus total advance tax paid upto 15th September
  • If advance tax paid on or before 15th December is less than 75% of tax due
    • Simple interest @1% per month for 3 months
    • 75% of tax due minus total advance tax paid upto 15th December
  •  If advance tax paid on or before 15th March is less than 100% of tax due
    • Simple interest @1% per month for 1 month
    • 100% of tax due minus total advance tax paid upto 15th March

In case of businesses under presumptive tax scheme, if advance tax paid on or before 15th March is less than the tax due, simple interest @ 1% shall be payable on the amount of shortfall from the tax due on the returned income.

Payment of advance tax in case of capital gains/ casual income

While it is easy to assess the regular income over a particular FY, transactions such as capital gains and casual winnings are difficult to estimate. Therefore, in such cases, the entire amount of tax payable (after deduction of tax at source, if any) should be paid in the remaining instalments of advance tax which are due. Where no such instalment is due, it should be paid by 31st March of the relevant FY.

The author is Founder and CEO, Insta C.A. The views expressed are author’s own.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition