Advance Tax is applicable to any assessee, including salaried employees, whose tax liability for the financial year as reduced by the tax deducted / collected at source is Rs 10,000 or more.
You may be getting messages from the Department of Income Tax regarding payment of the third installment of Advance Tax by December 15, 2018. Although Advance Taxes are mostly paid by corporates and professionals, income of whom are not tax deductible at source, but it is also applicable to any assessee, including salaried employees, whose tax liability for the financial year as reduced by the tax deducted / collected at source is Rs 10,000 or more.
So, apart from businessmen and professionals, even salaried people have to be careful about the money they have put in a savings bank account.
If you are a salaried person in the 30 per cent tax bracket and have kept Rs 4,28,500 or more in, say, an SBI bank account (which have interest rate of 3.5 per cent per annum) or Rs 4,26,500 or more in any other commercial bank (having interest rate of 4 per cent per annum) throughout the year, you will become liable to pay Advance Tax, as your interest income will exceed Rs 43,400 on which TDS is not levied and the tax-free part of which is only Rs 10,000 u/s 80TTA. After the 80TTA deduction, your interest will be Rs 33,400 and tax @ 30 per cent will be more than Rs 10,000.
Even if you have fixed deposits (FDs) in four or more banks, you may have to pay Advance Tax, as all the banks will deduct TDS on interest over Rs 10,000, leaving non-TDS interest of Rs 40,000 behind, on which more than Rs 10,000 tax has to be paid by a salaried person, who is in 30 per cent tax bracket.
Not only interest income, even on capital gains or income from other non-TDS sources, which pushes the tax payable over Rs 10,000, Advance Tax has to be paid.
So, in case the tax liability for the financial year, as reduced by the tax deducted / collected at source, becomes Rs 10,000 or more, you are liable to pay Advance Tax.
Such taxpayers, including corporates and professionals, have to pay 75 per cent of the advance tax payable through the 3rd installment by December 15, 2018. By March 15, 2019, the entire advance tax payable has to be deposited.
Moreover, any short or non-payment or deferment of payment of advance tax by you will result in levy of interest.
However, retired employees don’t have to bother, as resident senior citizens not having income from business/profession are not liable to pay advance tax.
Mode of payment: While e-payment is mandatory for all corporates and also for those assesses whose accounts are required to be audited u/s 44 AB of the Income Tax Act, it is advisable to other taxpayers also to deposit Advance Tax through e-payment, as is convenient and also ensures correct credit.
To e-pay your Advance Tax, you may visit NSDL site onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp and click on ‘CHALLAN NO./ITNS 280 (Payment of Income tax & Corporation Tax)’. On the page that opens, select the option (0021) Income Tax (Other than Companies) (for corporates, the option will be (0020) Corporation Tax (Companies)). Then put your PAN and select the Assessment Year as 2019-20. After filling your address, select ‘(100) Advance Tax’ as Type of Payment and then chose your preferred Mode of Payment to pay the third installment.