All about Advance tax in India

All about Advance tax in India

What is Advance Tax?

Advance tax means paying part of the tax liability arising in the previous year. It should be paid before the end of the financial year.It is payable before the end of 31st march.All the heads of Income come under advance tax net.

Why Advance Tax?

As per Income Tax Act, if the tax liability exceeds Rs 10,000 then advance tax is to be paid in the financial in which the income arises. Advance Tax is calculated on the basis of future income calculated for the respective financial year.The Advance tax is payment of tax in installment spread throughout the financial year.

When to pay Advance tax?

S NoDue dateAmount payable by non-corporate AssesseeAmount payable by corporate Assessee
1On or Before June 15th
NilUpto 15%
2On or Before September 15th
Upto 30%
Upto 45%
3On or Before December 15th
Upto 60%
Upto 75%
4On or Before Maarch 15th
Upto 100%
Upto 100%

As for Advance tax is not for salaried employees, since Tax is deducted for them at source.It is for people like Individual,HUF, Firm,Company, who have income other than salary income.

If an assessee earns income via capital gains on shares, interest on fixed deposits, winnings from lottery or races, capital gains on house property besides his regular business/salaried income then after adjusting for expenses or losses he needs to pay advance tax. 

Note that advance tax is payable even by salaried employees on their other income.

Employers deduct TDS on salaries, advance tax is paid on income that is not subject to TDS. Professionals (self-employed) and businessmen will have to pay advance tax as, if their business income, the liability exceeds Rs 10000. The same applies for companies and corporates.

Assessees covered u/s 44AD are to pay advance tax of the whole amount in one instalment on or before the 15th March of the financial year consequent upon raising of the turnover limit from Rs.1 crore to Rs. 2 crore.

Computation of Advance Tax is similar to computation of your Income Tax returns. One should  accumulate all the Income Sources, Deductions, and Exemptions & calculate the  tax liability.

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Advance Tax is also called as Pay-as-you earn scheme.Advance Tax should be be paid for the income in which it is earned.

One can  pay advance tax using tax payment challans at bank branches authorized by the Income Tax (I-T) Department. It can be deposited with the Reserve Bank of India, State Bank of India etc .Advance Tax can be deposited through cash, cheque and electronic mode (Debit Card/Credit Card).

Deduction under Chapter VIA are allowable while computing liability of advance tax.

Resident individuals who are over 60 years of age and do not have income chargeable under the head ‘Profits and Gains of Business or Profession’ are not required to pay advance tax. Further assessees covered under Section 44AD of the Act can deposit his liability of entire advance tax upto 15th March 2017.

The advance tax is applicable on both Non-Resident Indian (NRI) or a Non Resident if they have any income accrue during the year in India.

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