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This article elaborates on advance tax payment, the important rates and dates associated with advance tax and the importance of advance tax.

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Advance Tax

Introduction to tax - Tax constitutes a major form of revenue for most of the Governments across the world. Taxes are levied and spent by the government for the development of the country like infrastructure, healthcare, defense etc. Taxes can be categorized into two broad categories namely direct tax and indirect tax. A tax paid directly by the person on whom it is levied is known as direct tax. Taxes where the person paying and the person whom it is levied upon are two different people are an indirect tax. Example of direct tax is income tax and an example of indirect tax is sales tax.

Advance tax - Payment of tax liability by a person before the end of financial year is called Advance tax. This is applicable only in case of Income tax of an individual or a business entity. A simple question arises as why somebody would like to pay taxes in advance.

Are you liable to pay advance tax?
Advance tax is payable only when an assessee’s total tax liability is exceeding Rs 10,000.

Advance tax –Rates and Dates
For non corporate assessee installments of advance tax is to be paid as per the below
  • 30% of tax payable should be paid as advance tax on or before 15th September
  • 60% of tax payable should be paid as advance tax on or before 15th December
  • 100% of tax payable should be paid as advance tax on or before 15th January
  • There are 4 installments of advance tax for corporate assessee.
  • 15% of tax payable should be paid as advance tax on or before 15th June
  • 45% of tax payable should be paid as advance tax on or before 15th September
  • 75% of tax payable should be paid as advance tax on or before 15th December
  • 100% of tax payable should be paid as advance tax on or before 15th March
Consequences of nonpayment of advance tax –
If the amount of advance tax paid is less you will have to pay penalty interest as per the below

For Non Corporate assessee
  • If advance tax paid in the first two installments is less than specified, simple interest @ 1% per month is charged on the deficit amount for a period of 3 months.
  • If the aggregate of advance tax paid is less than 90% of tax payable on 15th March penalty of simple interest @ 1% per month is charged on the amount shortfall until the tax is paid
For Corporate assessee –
Simple interest @ of 1% is charged on the deficit amount for a term of 3 months if you have failed to pay advance tax or if advance tax paid is less than tax due as per the above slab. For the 4th and final installment if the advance tax paid is less than 90% of tax payable simple interest @ 1% per month is charged on the deficit from 1st April until the tax is fully paid. 

How to pay advance tax?
Advance tax can be paid online through the website of income tax department. It can also be paid by filling challan, ITNS 280 and submitting it at designated branches of specified banks. SBI, Corporation bank and ICICI are some of the banks that accept advance tax payments. 

What if Advance tax paid is more than required?
If the amount paid as advance tax is higher than the total tax liability, the assessee will receive the excess amount as a refund. Interest @6% p.a will be paid by the income tax department to the assessee on the excess amount if the excess amount is more than 10% of tax liability.

  • Satish Ghatnekar:
    In your above information sheet, for non corporate assesses,it is written that the 100% tax should be paid as advance Tax on or before 15th January.

    I think it should be 1st March.
    19-Jul-2013 01:42 PM
  • Ramesh Shishu:
    Cheque to be written to whose name for paying advance tax by challan?
    10-Mar-2013 04:34 PM
  • Jalajakshi:
    I have not paid my advance tax , so what can i do now?
    13-Feb-2013 02:12 PM
  • roshan neware:
    thank for information
    06-Feb-2013 11:33 PM
  • N G NAGARAJ:
    Dear sir,
    While calculating advance tax is the education cess also to be paid,otherwise we can add while we file the returns.
    25-Jan-2013 07:18 PM
  • Ankita:
    thank u for providing information.
    19-Jan-2013 07:44 PM
  • poonam:
    really it wonderful information,clear and understandable.
    10-Jan-2013 10:00 AM
  • lucky sunil tak:
    refund not received yet
    02-Jan-2013 03:55 PM
  • ajay kumar gupta:
    nice ad. tax details ...
    26-Dec-2012 06:05 PM
  • Ashish Bohra:
    Thank you for the information
    12-Dec-2012 01:57 PM
  • pallavi vivek mishra:
    thank you for the information
    10-Dec-2012 04:08 PM
  • Dr K U B Rao:
    I am a pensioner and the TDS at the time of payment of pension is very nearly the tax liability. Am I required to pay Advance tax.
    03-Dec-2012 10:33 PM
  • VISHWA NATH MISRA:
    FINANCE MINISTER ANNOUNCED THAT IS NOT PAYABLE FOR SR CITIZENS WHILE PRESENTING BUDGET. PLEASE COMMENT
    VISHWA NATH MISRA
    04-Oct-2012 09:46 PM
  • rajendra chaudhari:
    advance tax
    06-Sep-2012 08:26 PM