• Notification Date: 15-09-2023
• Notification No: N/A

Check Eligibility, Penalty for Default regarding the Payment of Second Instalment of Advance Tax

Taxpayers only have one day left to pay the second instalment of advance tax for the financial year 2023-2024 as the deadline for the same will end on Friday i.e., September 15. Missing the payment means taxpayers will be liable to penalties under sections 234B and 243C. 

Notably, advance tax is paid within the same financial year in which the income is earned. It is paid in four instalments. 15 percent of the total tax liability must be paid by June 15, while 45 percent must be paid by September 14. This includes the instalment paid in June. By December 15, the liability is 75 percent which includes instalments of June and September. By March 15, the entire tax, which is 100 percent must be paid, as per the income tax law. 

Any assessee, including salaried employees, whose tax liability for the financial year as reduced by tax deducted/collected at source is Rs 10,000 or more. Also, individuals who have sources of income other than their salary are required to pay advance tax. This includes income from rent, capital gains, fixed deposits, lottery winnings, etc. 

Exemptions 

Resident senior citizens (an individual of the age of 60 years or above) not having any income from business or profession are not liable to pay advance tax. Salaried persons who don’t have any income other than salary also need not pay advance tax instalments as employers deduct the applicable tax from the monthly salary. 

Mode of payment 

E-payment is mandatory for all corporates and those assessees whose accounts are required to be audited under Section 44AB of the income tax act, 1961. Section 44AB of the Income Tax Act contains provisions pertaining to the tax audit under the Income Tax Audit. A tax audit is an examination of a taxpayer's books of accounts. 

E-payment is convenient for other taxpayers also as it ensures correct credit. 

Penalty for default 

Any shortfall or default in paying any of the instalments of advance tax will add an interest burden for the taxpayer. Section 234C imposes an interest of 1 percent on the shortfall in the instalment amount for each month of delay in payment. On the total tax, there is a margin of up to 10 percent allowed. 

This means if taxpayers pay less than 90 percent of the assessed tax within the deadline, then section 234B requires the taxpayer to pay 1 percent interest for each month in the assessment year when the shortfall and delay continue. It must be noted that part of a month is also counted as a full month for interest calculation.