• Notification Date: 15-03-2024
• Notification No: N/A

Zerodha's Nithin Kamath offers Guidance on Tax Payment after March 15 Deadline

It is a known fact that taxpayers need to pay advance tax in four instalments for a particular financial year. The taxpayers need to pay the taxes in June, September, December and March. The last date for paying the fourth instalment of advance tax this financial year is March 15.

If a taxpayer's estimated annual tax liability for any given financial year after subtracting tax deducted at source (TDS) exceeds Rs 10,000 then one has to need to pay advance tax. The Income-Tax Act 1961 states that individuals need to make payments of advance tax following a specified schedule to avoid penalties.

Nithin Kamath, CEO and founder of Zerodha, on Tuesday shared his advice on filing advance taxes, especially for those involved in active stock market trading.

"An important aspect of being an active trader is ensuring you file your taxes on time. But most traders ignore this and end up with notices. March 15th is the deadline for filing advanced taxes, and many traders think that it may be applicable to them. If you have an estimated tax liability of Rs 10,000 in the form of capital gains, then you have to pay advance taxes. Profits from F&O and intraday are considered business income, and you will have to estimate their profits for the entire financial year and pay the applicable advance taxes as per the four installments. BTW, we've made this easier for you with all the tax-ready reports on Console," Kamath posted on X. 

He also shared a link to a video explaining the calculation of the advance taxes.

As per the prescribed schedule offered by the Income Tax department, the four dates by which taxpayers should pay the advance taxes are:

On or before June 15: 15% of the net estimated tax liability.

On or before Sep 15:  45% of the net estimated tax liability minus advance tax already paid.

On or before December 15: 75% of net estimated tax minus advance tax already paid.

On or before March 15: 100% of net estimated tax minus advance tax already paid.

If a taxpayer fails to pay advance tax amount and instalments within the specified deadline, he or she has to pay penal interest. Interest under Section 234C is levied at 1% rate per month for three months. Interest will also be levied if a taxpayer has failed to pay advance tax or paid less than 90% of the assessed tax of the individual as well.

Exempted Individuals from Paying Advance Taxes are:

1. Senior citizens: Senior citizens who do not have any income from business or profession are exempted from payment of advance taxes.

2. Section 44ADL Taxpayers who have opted for the presumptive taxation scheme under Section 44AD or 44ADA don't have to pay advance income tax.

3. Salaried class:  Salaried individuals whose TDS is deducted need not pay any advance tax in most cases.