Advance tax is which we are paying in advance for the particular assessment year in installment this is based on projected income for the particular financial year. Advance tax, it refers to paying a part of your yearly taxes in advance. Advance tax is the income tax payable if your tax liability exceeds Rs 10,000 in a financial year.
Advance tax is applied when an individual has sources of income other than salary like earning from capital gains, interest on investments, lotteries, house property or business.
Advance tax is one of the major tools used by the Govt. to collect tax from the assesses all over India.Mainly aims at reducing the last moment hassles to an assessee for payment of tax liability which may be because of either shortage of time or funds.
What is the procedure for paying Advance Tax?
Direct Mode of Payment
- Self Assessment Tax can be paid by filing a Tax Payment Challan 280
- Online Mode of Payment
How is advance tax Calculated?
Advance tax is calculated on income that an individual might earn during the year, in that sense it is estimated income and rates applicable for the financial year.
Advance tax dates and tax payable from FY 2016-17 for both individual and corporate taxpayers
|Due Date || ||Advance Tax Payable |
|On or before 15th June || || 15% of advance tax |
|On or before 15th September || || 45% of advance tax |
|On or before 15th December || || 75% of advance tax|
|On or before 15th March || || 100% of advance tax|
Below are the dates and percentages before FY 2016-17
|Due Date || || || Installment of Advance Tax|
|15th September|| || Up-to 30%|
|15th December|| || Up-to 60%|
|15th March || || Up-to 100%|
Pay Online or e-Payment
E-payment facilitates of advance taxes online by taxpayers.To avail this facility the taxpayers is required to have a net-banking account with any of the Authorized Banks.
The aim of the Indian government behind setting up the advance tax system was to speed up the tax collection.This system also allowed the government to earn interest on the amount collected as tax, thus increasing funds to the government offers.