• Notification Date: 24-09-2024
• Notification No: N/A

Advance Payment of Tax: Due Date, Calculate, Procedure, Installment Details

An advance tax payment is paid by an individual on sources of income beyond his/her regular salary, including rental income, capital gains, lottery winnings, fixed deposits, etc. Payment can be done online through the e-filing portal.  

What is advance tax?  

An income tax advance payment is also known as an advance tax that is paid in advance instead of in a lump sum payment amount at the end of the financial year. It is an income tax paid as and when you earn it. These payments have to be paid in instalments as per the due dates specified by the Income Tax Department.   

Who has to pay in advance on taxes?  

Employees, freelancers, and corporations: if your total tax liability for a financial year is Rs 10,000 or more, you have to pay in advance on tax. Advances are applicable to all taxpayers, employees, freelancers, and corporations.  

Senior citizens: Persons aged 60 years and above who are not running a business are exempt from paying advances on taxes. Therefore, only senior citizens (above 60 years of age) with business income are required to pay an advance on tax. 

Expected Income of Business: Taxpayers who have opted for the advance tax payment regime under Section 44AD must pay the entire advance on tax amount in one installment on or before March 15. They also have the option to pay all taxes before March 31. 

Expected Income of Professionals: Individual professionals such as doctors, lawyers, architects, etc. They come in advance on the tax regime under Section 44ADA. The entire advance tax payment must be paid in one installment before March 15. It is also possible to pay the entire amount before March 31. 

Advance Tax Payment Deadlines for FY 2024-25  

For individual and corporate taxpayers in FY 2024-25:

• Due on or before June 15: 15% of the advance tax payment.

• Due on or before September 15—45% of the advance tax payment (-) if the tax advance has already been paid.

• Due on or before December 15: 75% of the advance tax payment (-) if the tax advance has already been paid.

• Due before March 15: 100% of the advance taxes payment (-) has already been paid.

How is advance tax calculated by any taxpayer (Business or Individual)? 

Below are the following steps how you can calculate the advance on taxes: 

Step 1: Estimate your total income for the assessment year from various sources, including capital gains, rental income, professional income, fixed deposit income, salary, and other sources. 

Step 2: Deduct various deductions under sections 80C, 80D, etc. from your total revenue. 

Step 3: Calculate the tax payable based on the current tax slab rates. 

Step 4: Tax deduct at source (TDS) already deducted or expected to be deducted based on Tax deduct at source rates.  

Taxes payable and Taxes Refund 

Advance payment is the payment of tax in four instalments during a financial year based on estimated annual income to avoid a lump sum payment at the end of the year. If after adjusting the advance tax payment, tax collected at source, and tax deducted at source there remains a deficiency or excess in the tax due, the taxpayer is entitled to pay or refund the applicable taxes.  

How do people make an advance tax payment? 

Advance tax payment is made using Chalan 280, just like paying any other regular tax. You can read a detailed article on paying personal income tax online. 

Why is advance tax payment necessary? 

Advance tax payments benefit both the government and the individual/organization paying them. From the government's perspective, they provide a continuous source of income throughout the year. From the individual/organization's perspective, they reduce the burden at the end of the year of paying a flat rate tax. If advance tax is not paid, the taxpayer may have to pay interest under the Income Tax Act. Therefore, advance tax payments must be made on time.