You must have often heard that a certain celebrity has paid so much advance tax. In such a situation, the question must be coming in your mind that what is advance tax, why and how is it paid and what will happen if it is not paid on time? This time the last date to pay advance tax is March 15. Before that, let us know the answers to these questions.
New Delhi. If you are a taxpayer and want to avoid other problems with income tax notices, then you should pay all the taxes on time. At present, the last date for filing advance tax has come, which is 15th March.
Let us know what advance tax is, who has to pay it, what is the method of paying it and what will happen if you do not pay advance tax on time.
What is advance tax?
You can consider this as a kind of income tax. But, it does not have to be paid in lump sum on annual basis like normal tax. It is deposited with the Income Tax Department in advance in installments.
Who has to pay this tax?
Advance tax is for those whose tax liability is Rs 10,000 or more. If you are a celebrity, freelancer or businessman, or earn money in any other way, then you have to pay this. However, people above 60 years of age who do not do business are exempted from advance tax.
Employed people do not have to pay advance tax, because the company already deducts the tax and deposits it with the Income Tax Department.
When is advance tax to be paid?
You pay income tax annually in lump sum, but advance tax has to be paid in installments on quarterly basis. The date is decided by the Income Tax Department.
The dates for filing advance tax for the current financial year were June 15, September 15, December 15 and March 15. Now only the advance tax of March 15 is left.
How is the calculation done?
Advance tax is calculated for the entire year, even if it is paid in instalments. First you need to know how much tax you may have to pay in the financial year. Then after removing deductions from your income, you can calculate tax on the remaining amount as per the tax slab.
You have to pay at least 15 percent of your advance tax in the first quarter, 45 percent in the second, 75 percent in the third and 100 percent in the fourth.
What if advance tax is not paid?
If you want to avoid penalty, you should pay advance tax on time. If there is a default or delay in this, a penalty of 1 per cent per month interest rate is charged on the outstanding advance tax every month.
This interest is charged for one month on payment of the first installment and then for three months in case of non-payment of subsequent installments.
