This post has been updated on Jun 02, 2016
This is the income tax that is payable if your tax liability exceeds Rs. 10,000 and should be paid in the same year in which income is received. It is also called as “Pay as you Earn” scheme, since you pay the tax in the same year in which you earn income. It means you should deposit tax with the government in advance instead of paying a lump at the time of filing IT returns. Advance tax applies to all taxpayers such as , freelancers, business person & even business itself too (including Non-Residents). For the salaried class, TDS by employer usually takes care it, but if they have significant income other than salary, such as, rental income, interest income, capital gains then advance tax shall be applicable to them. Thus salary class too need to pay advance tax for such additional income or for the part of salary income if employer (some cases, previous employer) have not deducted right TDS.
For FY 2016-17 (AY 2017-18), below table is the latest Advance Tax payment installment dates and respective due amount
For e.g. If estimated tax is Rs. 1,00,000 of an individual (Non-Corporate Assessee), payable advance tax should be paid as per below installments amount by the respective due dates;
Any amount paid by way of advance tax on or before 31st March shall also be treated as advance tax paid during financial year ending on that day.
Presumptive Income for Businesses – Starting FY 2016-17, those who opt for presumptive scheme have to pay whole amount of their advance tax in one installment on or before 15th March. Even if the advance tax payment is done on or before 31st March, then that too is fine. Under presumptive scheme, businesses turnover should be Rs 2 crores or less (Section 44AD).
Presumptive Income for Professionals – Starting FY 2016-17, this scheme has been extended to professionals such as doctors, lawyers, architects etc if their gross receipts are Rs.50 Lacs or less(Section 44ADA). Such taxpayers have to pay advance tax as per quarterly installments stated in above table.
Below table shows the Advance Tax payable schedules for FY 2014-15 & FY 2015-16
Senior Citizens are exempted from paying Advance Tax
Senior citizens (age 60 years on or before the end of previous year) have been provided exemption from paying advance tax with effect from April 1, 2012. Remember, it’s applicable to those senior citizens who do not have income from business or profession. Accordingly, they can calculate their liability at the end of the year and deposit all taxes at that time as self-assessment tax.
What are the consequences of non-payment of Advance Tax?
If you fail to pay tax in advance or paid partially, before the end of the financial year (March 31st) then interest under section 234B, 234C of the Income Tax Act, 1961.
What happens if excess Advance Tax have been paid?
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.
How to pay advance tax?
Advance Tax could be paid using offline Tax Payment Challan at designated branches of banks empanelled with the Income Tax Department. Alternatively (best option), online payment through the Income Tax Dept / NSDL website. https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp and use CHALLAN NO. /ITNS 280