Are you paying Advance tax
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Pay Advance Tax - Avoid interest

70°
Deal Subedar
manishs

As most of us (specially from stock market), earning good in this great ongoing financial year - need to pay advance tax to avoid interest. I am paying, hope you are also. 

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The advance tax must be paid on the 15th of the last month of every quarter.
What Is Advance Tax?

Advance tax is the income-tax amount a taxpayer pays in advance for a particular financial year. Generally, taxpayers pay the outstanding tax at the end of the financial year. Because of this one-time payment, they must pay substantial amounts in a single go. But in the case of advance tax, taxpayers can pay the estimated tax in four instalments in the current year only, which helps reduce their financial burden.

Advance tax is applicable to individuals, self-employed professionals, and businesses whose estimated tax liability for the financial year exceeds a certain threshold. Let’s find out who is required to pay advance tax.

Who Should Pay Advance Tax?

As per Section 208 of the Income Tax Act, individuals with an estimated tax liability of Rs. 10,000 or higher for a financial year must make advance tax payments.

Also, taxpayers who opted for a presumptive taxation scheme under Section 44AD or Section 44ADA are liable to pay advance tax.

However, a resident senior citizen aged 60 years or above in the relevant financial year and who does not generate any income from a business or profession is exempt from the obligation to pay advance tax.

Benefits of Paying Advance Tax

Here are some benefits of paying advance tax:

  • Better financial planning: Paying advance tax requires estimating your taxable income for the financial year and making corresponding tax payments in instalments. Hence, it encourages better financial planning and budgeting, allowing you to manage your cash flows effectively.
  • Avoid interest: It is mandatory for taxpayers to deposit advance tax on a timely basis. If you do not pay advance tax on the due date, you must pay interest on the amount due. Thus, paying advance tax helps you avoid interest penalties.
  • Reduce tax burden: You can spread your tax liability over the year by paying taxes in advance rather than confronting a huge tax bill at the end of the financial year. This reduces the financial strain and allows for a more balanced approach to tax payment.
  • Avoids tax default: Paying advance tax helps you avoid unwittingly non-paying income-tax dues. If you fail to pay your tax liabilities on time, you may face negative consequences, such as interests, penalties, or any other legal consequences.

Disclaimer
We are not SEBI/IRDA registered. The information provided herein is for education purposes only. We will not be responsible for any of your profit/loss with this channel's suggestions. Consult your financial advisor before making any decisions.
9 Comments  |  
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Deal Subedar Deal Subedar
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If you are an investor and you only ltcg less the 1L this year, you don't need to pay advance tax on that part of your income.

Saying this, because you mentioned share market income.

Deal Subedar Deal Subedar
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please make 15th of the last month of every quarter. bold or bigger in your post 

Deal Cadet Deal Cadet
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Any reason for paying advance tax? Any benefits in terms of rewards/tax amount? 

Deal Subedar Deal Subedar
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It is mandatory for taxpayers to deposit advance tax on a timely basis. If you do not pay advance tax on the due date, you must pay interest on the amount due. Thus, paying advance tax helps you avoid interest penalties.

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Deal Subedar Deal Subedar
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missed the 15 dec deadline, If i pay now, will I avoid interest for jan onwards? or I can do it in march itself now? 

Deal Subedar Deal Subedar
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Interest is levied per month basis. If you pay now, you will only be charged Interest upto now. If you wait until march you have pay 2 months Interest unnecessarily.

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Deal Subedar Deal Subedar
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Reminder : Time to Pay Advance Tax

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