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Taxation
Why waiting till March to pay tax could cost you more?
Do you plan on paying your tax at the end of the financial year? Think again! Paying your tax in advance not only saves you from huge penalties but also helps you in controlling your money better.
What is advance tax?
Advance tax is when you pay your tax prior to the closing of the financial year. Rather than paying all your taxes in one go, you make payments in installments. The Income Tax Act states that if your tax liability in a year is ₹10,000 or more, you have to pay tax in advance.
Who must pay advance tax?
Not everyone has to pay the advance tax. Here's who must:
- Salaried Individuals: If your employer doesn't deduct sufficient TDS, or you have other sources of income.
- Businessmen and Professionals: If you own a business or are a professional, or freelancer.
- Investors: If you receive interest, dividends, or capital gains, which are subject to tax.
- Landlords: If you receive rental income on which tax is not withheld at source.
When to pay advance tax?
Advance tax is paid in four installments throughout the year.
| Due Date | Minimum Amount to Pay |
|---|---|
| June 15 | 15% of total tax |
| Sept 15 | 45% of total tax |
| Dec 15 | 75% of total tax |
| March 15 | 100% of total tax |
Miss these dates, and you will be charged interest under Section 234B and 234C.
How to pay advance tax?
Advance tax can be easily paid. You can pay advance tax online via the Income Tax website or through net banking. Alternatively, you can pay at designated bank branches using Form 280.
Conclusion
Advance tax payment is not only a legal obligation but also a wise money practice. It allows you to pay your taxes in installments during the year rather than facing a massive tax bill in March.
Disclaimer: This article is for information purposes only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
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