Failing to pay advance tax is alright so long as the taxpayer files their income tax return by July 31 next year (deadline for this year is Sept 15) and clear their income tax liability along with interest which accrues on account of non payment of advance tax.
When should you pay it?
Advance tax must be paid in four instalments. The first instalment has to be paid by June 15 when the 15 percent of tax liability must be cleared.
What are the other deadlines to pay advance tax?
The other deadlines to pay advance tax are September 15, December 15 and March 15.
What is the proportion of tax liability that needs to be cleared on these deadlines?
Taxpayers must clear a minimum of 15 percent of their tax liability by June 15; 45 percent by Sept 15; 75 percent by December 15 and 100 percent by March 15. The table below describes this information in a tabulated form.
What happens when you do not pay advance tax?
When you do not pay advance tax, you are meant to pay interest at the rate of 1 percent per month. Under section 234C of Income Tax (I-T) Act, taxpayers accrue interest on outstanding tax which accrues at the rate of 1 percent a year annum for tax liability. Payment of advance tax is vital to avoid payment of this 1 percent which obviously becomes 12 percent by the end of the year.
Who should pay advance tax?
Advance tax should be paid by anyone who is a salaried professional or freelancer or business owner with tax liability of ₹10,000 or more.
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