How and when should you pay your Advance Taxes?
Advance Tax – Taxes have in present day become a very important concern for all ever since the Modi government has started being stringent towards its fight against the so called black money devil.
In present it has become very important to safeguard all data and information relating to monetary transactions as any banking transaction can turn out to be a big havoc if the audit trail of it is un-maintained. It is very important to know every minute detail about tax payment in India.
Tax collection in India is generally done in two ways – Advance tax or lump sum tax payment. Now what is advance tax? Advance tax refers to the payment of tax in installments instead of paying a lump sum amount at the end of financial year.
These installments and their due dates are specified by Income Tax Department of India. Advance tax is also referred as Pay as you earn tax.
Who are Liable to pay Advance Tax?
Any individual whose liable income tax (after deducting Tax Deducted at Salary i.e. TDS) is more than Rs 10,000 for the corresponding financial year has to pay installments amount as per Income Tax Department. This is applicable to following:
Any senior citizen without any business source is exempted from Advance tax payment.
Benefit to Government from Advance Tax:
It helps in regular money flow to government throughout the year. All the collected money can be used in various schemes and policies.
Due Dates for FY 2017-2018:
Income Tax Department has set following due dates for financial year 2016-2017:
- By 15 June: An amount equivalent to 15% of calculated tax.
- By 15 September: An amount equivalent to 45% of calculated tax.
- By 15 December: An amount equivalent to 75% of calculated tax.
- By 15 March:An amount equivalent to 100% of calculated tax.
Challan No 280 is used for filing and payment of Advance Income Tax and can be done in various banks .Alternatively; one can also pay via the online portal facilitated by Income Tax Department
Penalty for Late/ Failure of Payment:
In case you miss to pay the amount on or before the above mentioned due dates, a penalty interest is levied as below:
- Under Section 234 C: An interest amount equivalent to 1% is levied per month on the amount due.
- Under Section 234 B: An interest amount equivalent to 1% per month is levied, for cases where 90% of the tax is not paid during the financial year.
It is always advisable to pay advance tax on time to avoid last minute panic and penalty. Proper estimation of salary and other income must be done at the start of financial year to avoid trouble. As we know taxes and income go hand in hand, so we must take it very seriously and if required take assistance from experts and professionals.