Advance Tax Calculations & Important Dates

Advance Tax

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What is Advance Tax?

Table of Contents

Generally, tax on the income earned in the previous year is paid in the respective assessment year, but in certain cases, an assessee may be required to pay tax during the previous year itself, as Advance tax. The scheme of advance tax is based on the concept “Pay as you earn”. Under this scheme assessee needs to estimate its income and tax liability of the previous year and pay tax on basis of such estimation in the previous year itself. For instance, income earned during the previous year 2019-20 is normally taxable in the assessment year 2020-21, however under the scheme of Advance tax, assessee is required to pay tax on estimated income of previous year 2019-20 in the previous year itself.

Who needs to pay Advance Tax?

Where the advance tax liability of the assessee is Rs. 10,000 or more, the assessee should pay such tax in the previous year itself within the due date

Where an assessee is a senior citizen (or super senior citizen) and does not have any income chargeable under the head “Profits and gains of business or profession”, provision of advance tax is not applicable. In other words, senior citizen not having business income is not liable to pay advance tax.

Due date for payment of advance tax

Assessee	Due date of installment (of previous year)	Minimum amount payable
An eligible assessee in respect of an eligible business referred to in sec. 44AD or 44ADA	On or before March 15	100% of advance tax liability
Other Assessee	On or before June 15	Upto 15% of advance tax liability
	On or before September 15	Upto 45% of advance tax liability (-) amount paid in earlier instalment(s).
	On or before December 15	Upto 75% of advance tax liability (-) amount paid in earlier instalment(s).
	On or before March 15	Upto 100% of advance tax liability (-) amount paid in earlier instalment(s).

How to Calculate Advance Tax Liability?

advance tax liability

How to Pay Advance Tax Online?

You can make online payment by visiting the official website of the income tax department.

Visit the e-payment facility on the website of Income Tax Department.
Choose the right form for the payment of Advance Tax i.e. Challan No./ ITNS 280.
Select the correct code for Advance Tax. The code number applicable is 100.
Fill out your PAN, name, address, email address, number etc
Once you click on proceed, you will be redirected to the net banking page or debit card payment gateway, whichever you have opted for.
Make the payment.
After making the payment, you will get the receipt called Challan 280 on the next screen. Save a copy of it as you will need it at the time of filing ITR.

Will I be penalized if I do not pay advance tax?

Non payment of advance tax will result in levy of interest under 234B and 234C of the Income tax Act, 1961.