Why Advance Tax is paid

Liability to pay advance tax
As per section 208, every person whose estimated tax liability for the year is Rs. 10,000
or more, shall pay his tax in advance, in the form of “advance tax”. In this part you can
gain knowledge on various provisions relating to payment of advance tax by a taxpayer.
Person not liable to pay advance tax
As discussed above, every person whose estimated tax liability for the year is Rs. 10,000
or more is liable to pay advance tax.

 However, a resident senior citizen (i.e., an individual of the age of 60 years or
above during the relevant financial year) not having any income from business or
profession is not liable to pay advance tax.

Advance tax is a type of tax under Income tax Act of India that has to be paid in advance by taxpayers who have an estimated tax liability of more than Rs. 10,000 in a financial year

Advance Tax by Small Taxpayers opting 44AD or 44ADA

Illustration
Mr. Kumar is running a provision store. The turnover of the store for the financial year
2024-25 amounted to Rs. 1,84,00,000. He wants to declare income under section 44AD at
8% of the turnover. He does not have any other source of income. Will he be liable to pay
advance tax?
**
Mr. Kumar satisfies the criteria of section 44AD in respect of provision store business
and, hence, he can adopt the provisions of section 44AD and declare income at 8% of the
turnover.
A taxpayer opting for the presumptive taxation scheme of section 44AD is also liable to
pay advance tax in respect of business covered under section 44AD. Thus, if Mr. Kumar
adopts the provisions of section 44AD, he is also liable to pay advance tax in respect of
income generated from provision store business.

Mr. Vipul (age 39 years) is running a medical store. The turnover of the store for the
financial year 2024-25 amounted to Rs. 40,00,000. His accounts revealed a net profit of
Rs. 2,60,000. Will he be liable to pay advance tax?
**
In this case, Mr. Vipul will be liable to pay advance tax in respect of income generated
from medical store business if his estimated tax liability for the financial year comes out
Rs. 10,000 or more. The taxable income of Mr. Vipul is Rs. 2,60,000. Tax on Rs.
2,60,000 will be Rs. NIL, hence, Mr. Vipul is not liable to pay advance tax.
(*) The normal tax rates for the financial year 2024-25 applicable to an individual below
the age of 60 years are as follows:
Nil upto income of Rs. 2,50,000

5% for income above Rs. 2,50,000 but upto Rs. 5,00,000

20% for income above Rs. 5,00,000 but upto Rs. 10,00,000
30% for income above Rs. 10,00,000

However in case of taxpayer, being an Individual resident in India, rebate under section
87A of Rs. 12,500 or 100% of tax, whichever is lower, would be provided if his total
income does not exceed Rs. 5,00,000.
A maximum rebate of Rs. 25,000 is allowed under section 87A from the amount of income
tax on total income, which is chargeable to tax under section 115BAC(1A). However, this
rebate is allowed if the total income of assessee chargeable to tax under section
115BAC(1A) is up to Rs. 7,00,000.
Further, if the total income chargeable to tax under section 115BAC(1A) exceeds Rs.
7,00,000 and the tax payable on such income exceeds the difference between the total
income and Rs. 7,00,000, he can claim a rebate with marginal relief to the extent of the
difference between the tax payable on such total income and the amount by which it exceeds
Rs. 7,00,000
Apart from above, health and education cess @ 4% will be levied on the amount of tax

What are Advance Tax due dates AY 2025-26

Advance tax is to be paid in different instalments. The due dates for payment of different instalments of advance tax are as follows:

Note 1: Any tax paid till 31st March 2025 will be treated as advance tax.

Note 2: If the last day for payment of any instalment of advance tax is a day on which the banks are closed, then the taxpayer should pay the advance tax on the immediately following working day [Circular No. 676, dated 14-1 -1994].

Note 3 If the notice of demand issued under section 156 in pursuance of an order of the Assessing Officer under section 210 (3) and Section 210(4)  is served after any of the due dates  the whole of the amount of the advance tax specified in above table ,the whole of the amount of the advance tax specified in such notice shall be payable on or before each of such of those dates as fall after the date of service of the notice of demand.

Refer Section 211 : Installments of advance tax and due dates

Who is required to Pay Advance tax for AY 2025-26 ?

As per section 208, every person whose estimated tax liability for the year is Rs. 10,000  or more, shall pay his tax in advance, in the form of “advance tax”. In this part you can gain knowledge on various provisions relating to payment of advance tax by a taxpayer.

What are the Person who not liable to pay advance tax for AY 2025-26 ?

As discussed above, every person whose estimated tax liability for the year is Rs. 10,000  or more is liable to pay advance tax.
However, a resident senior citizen (i.e., an individual of the age of 60 years or  above during the relevant financial year) not having any income from business or profession is not liable to pay advance tax.

Exemption from Advance Tax to Resident Senior Citizen under Income Tax

Advance Tax in Case of Senior Citizens

How to calculate Advance Tax for AY 2025-26

you can use ADVANCE TAX CALCULATOR on Income Tax Website

Note : Advance tax clauclation can change if you opt New Taxation regime in Income tax u/s 115BAC

Advance Tax due dates AY 2023-24

In this article we will discuss Advance Tax due dates AY 2023-24 as per Income tax Act of India , Who should pay advance tax and when, How to calcuate Advance tax Liability , What are the consequeces of not paying Advance Tax or paying less then required.

Why Advance Tax is paid

Advance tax is a type of tax under Income tax Act of India that has to be paid in advance by taxpayers who have an estimated tax liability of more than Rs. 10,000 in a financial year

What are Advance Tax due dates AY 2023-24

Advance tax is to be paid in different instalments. The due dates for payment of different instalments of advance tax are as follows:

Note 1: Any tax paid till 31st March 2023 will be treated as advance tax.

Note 2: If the last day for payment of any instalment of advance tax is a day on which the banks are closed, then the taxpayer should pay the advance tax on the immediately following working day [Circular No. 676, dated 14-1 -1994].

Note 3 If the notice of demand issued under section 156 in pursuance of an order of the Assessing Officer under section 210 (3) and Section 210(4)  is served after any of the due dates  the whole of the amount of the advance tax specified in above table ,the whole of the amount of the advance tax specified in such notice shall be payable on or before each of such of those dates as fall after the date of service of the notice of demand.

Refer Section 211 : Installments of advance tax and due dates

Illustration
Mr. Kumar is a doctor. Although MR. Kumar is in profession specified under Section
44AA(1) but he doesn’t opt for the presumptive taxation scheme of Section 44ADA. His estimated tax liability for the financial year 2024-25 amounted to Rs. 1,00,000. By which
dates he should pay advance tax and how much?
**
If the estimated tax liability of the taxpayer is Rs. 10,000 or more, then he has to
discharge his tax liability in the form of advance tax. Advance tax is to be paid in
different instalments. The due dates for payment of different instalments of advance tax
are as follows:

Mr. Kumar being a doctor is in profession specified under section 44AA(1) but he
doesn’t opt for the presumptive taxation scheme of section 44ADA. Hence, he has to pay
advance tax in four installments as given hereunder:
 His first installment of advance tax will fall due on 15th June, 2024. He should
pay 15% of his tax liability in advance, hence, he should pay Rs. 15,000 on account of advance tax by 15th June, 2024.
 His second installment of advance tax will fall due on 15th September, 2024. By 15th September, he should pay 45% of his liability in advance, i.e., Rs. 45,000.
Assuming that he has already paid Rs. 15,000 as advance tax by 15th June, he should pay balance of Rs. 30,000 on account of advance tax by 15th September, 2024. Thus, total payment of advance tax till 15th September will amount to Rs.
45,000.
 His third installment of advance tax will fall due on 15th December, 2024. By  15th December, he should pay 75% of his liability in advance, i.e., Rs. 75,000.
Assuming that he has already paid Rs. 45,000 as advance tax till 15th September, he should pay balance of Rs. 30,000 on account of advance tax by 15th December, 2024. Thus, total payment of advance tax till 15th December, 2024 will amount to Rs. 75,000.
 His fourth and final installment of advance tax will fall due on 15th March, 2025. By 15th March, he should pay 100% of his liability in advance, i.e., Rs. 1,00,000.

Assuming that he has already paid Rs. 75,000 as advance tax till 15th December,
he should pay balance of Rs. 25,000 on account of advance tax by 15th March,
2025 Thus, total payment of advance tax till 15th March, 2025 will amount to Rs.
1,00,000.

Mode of payment of advance tax

As per Rule 125 of the Income-tax Rules, 1962 a corporate taxpayer (i.e., a company)
shall pay taxes through the electronic payment mode using the internet banking facility of
the authorised banks.
Taxpayers other than a company, who are required to get their accounts audited, shall pay
taxes through the electronic payment mode using the internet banking facility of the
authorised banks.
Any other taxpayer can pay tax either by electronic mode or by physical mode i.e. by
depositing the challan at the receiving bank.

Payment of advance tax

Advance tax can be paid by the taxpayer either on his own account or in pursuance of an
order of the Assessing Officer.
The taxpayer who is liable to pay advance tax is required to estimate his current income
and pay advance tax on his own account. In such a case, he is not required to submit any
estimate or statement of income to the tax authorities.
After making payment of first or second or third instalment of advance tax (as the case
may be), if there is a change in the tax liability, then the taxpayer can revise the quantum
of advance tax in the remaining instalment(s) and pay the tax as per revised estimates.
Tax can be computed on the current income (estimated by the taxpayer) at the rates in
force during the financial year. From the tax so computed, tax deducted or collected at
source will be deducted and the balance tax payable will be used to compute the advance
tax liability. Also, relief of tax allowed under section 90 or section 90A or any deduction
under section 91 or any tax credit allowed to be set off as per section 115JAA or section
115JD shall also be deducted while computing the advance tax liability.

Illustration
Mr. Raja is an architect. Although MR. Rana is in profession specified under Section
44AA(1) but he doesn’t opt for the presumptive taxation scheme of Section 44ADA. His
estimated tax liability for the year amounts to Rs. 1,00,000. He has paid advance tax of
Rs. 15,000 by 15th June. In the month of August one of his clients paid fee of Rs.
1,80,000 after deducting tax at source of Rs. 20,000 (Such fees of Rs. 1,80,000 was
considered at earlier occasion for estimating the tax liability of taxpayer). In this case
how much of advance tax he is required to pay in the remaining installments?

If the estimated tax liability of the taxpayer is Rs. 10,000 or more, then he has to
discharge his tax liability in the form of advance tax. Advance tax is to be paid in
different installments. The due dates for payment of different installments of advance tax
in case of all assessees (other than the eligible assessees as referred to in section 44AD or
section 44ADA) are as follows:

Considering the above dates, Mr. Raja has to pay 15% of his estimated tax liability by
15th June. Hence, he has to pay Rs. 15,000 on account of advance tax by 15th June.
While computing the advance tax liability, the taxpayer can deduct the tax at source from
his income. In this case, at the time of estimation of first installment there was no TDS
credit with Mr. Raja. His estimated tax liability without TDS amounted to Rs. 1,00,000.
In the month of August he received Rs. 1,80,000 after deduction of tax of Rs. 20,000,
hence, he got a TDS credit of Rs. 20,000. His tax liability after granting of credit of TDS
will come to Rs. 80,000. In second installment, i.e., by 15th September he should pay up
to 45% of his revised tax liability. Thus, he should pay up to Rs. 36,000 (i.e., 45% of Rs.
80,000) by 15th September. He has already paid Rs. 15,000 by 15th June and, hence, he
should pay balance of Rs. 21,000 by 15th September. In third installment, i.e., by 15th
December he should pay 75% of his estimated tax liability. Thus, he should pay Rs.
60,000 (i.e., 75% of 80,000) by 15th December. He has already paid Rs. 36,000 till 15th
September and, hence, he should pay balance of Rs. 24,000 by 15th December (i.e., Rs.
60,000 – Rs. 36,000).Finally in fourth and final installment, i.e., by 15th march he should
pay 100% of his estimated tax liability. Thus he should pay Rs. 80000 by 15th March. He
has already paid Rs. 60000 till 15th December and hence, he should pay Rs. 20000 by 15th
March (i.e., Rs.80000-Rs.60000).

Illustration
Mr. Rana is an engineer. Although MR. Rana is in profession specified under Section
44AA(1) but he doesn’t opt for the presumptive taxation scheme of Section 44ADA. His
estimated tax liability for the year amounts to Rs. 2,00,000. He has paid advance tax of
Rs. 30,000 by 15th June. In the month of August he got a contract from a multinational
company. After incorporating the receipts of the new contract, his revised tax liability for
the year amounts to Rs. 3,00,000. In this case, how much advance tax he is required to
pay in each installment?

If the estimated tax liability of the taxpayer is Rs. 10,000 or more, then he has to
discharge his tax liability in the form of advance tax. Advance tax is to be paid in
different installments. The due dates for payment of different installments of advance tax
in case of all assessees (other than the eligible assessees as referred to in section 44AD or
section 44ADA) are as follows:

Who is required to Pay Advance tax for AY 2023-24 ?

As per section 208, every person whose estimated tax liability for the year is Rs. 10,000  or more, shall pay his tax in advance, in the form of “advance tax”. In this part you can gain knowledge on various provisions relating to payment of advance tax by a taxpayer.

What are the Person who not liable to pay advance tax for AY 2023-24 ?

As discussed above, every person whose estimated tax liability for the year is Rs. 10,000  or more is liable to pay advance tax.
However, a resident senior citizen (i.e., an individual of the age of 60 years or  above during the relevant financial year) not having any income from business or profession is not liable to pay advance tax.

Exemption from Advance Tax to Resident Senior Citizen under Income Tax

How to calcuate Advance Tax for AY 2023-24

you can use ADVANCE TAX CALCULATOR FOR AY 2023-24 /FY 2022-23 

Note : Advance tax clauclation can change if you opt New Taxation regime in Income tax u/s 115BAC

Illustration

Compute the amount of advance tax to be paid by Mr. Kapoor (age 35 years) from the following details provided by him (for the year FY 2022-23 /AY 2023-24):

• Taxable business income Rs. 10,84,000.
• Interest on debenture Rs. 9,000 (after deduction of tax at source of Rs. 1,000).
• Investment in NSC during the year Rs. 80,000.
• He has paid tuition fees of his son of Rs. 1333.

**

Computation of taxable income and tax liability of Mr. Kapoor for the AY 2023-24 :

(*) The normal tax rates for the financial year 2022-23 AY 2023-24  applicable to an individual below the age of 60 years are as follows:

• Nil up to income of Rs. 2,50,000
• 5% for income above Rs. 2,50,000 but up to Rs. 5,00,000
• 20% for income above Rs. 5,00,000 but up to Rs. 10,00,000
• 30% for income above Rs. 10,00,000.

Apart from above, health and education cess at 4% will be levied on the amount of tax.

As per section 208, every person whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance, in the form of “advance tax”. In this case, the tax liability amounts to Rs. 1,19,952 and, hence, Mr. Kapoor is liable to pay advance tax.

The due dates for payment of different installments of advance tax in case of all assessees (other than the eligible assessees as referred to in Section 44AD)are as follows:

Considering the above due dates, the advance tax to be paid by Mr. Kapoor on different dates will be as follows:

His first installment of advance tax will fall due on 15th June, 2021. His estimated tax  liability for the year is Rs. 1,19,952 (for easy computation, liability is rounded off to Rs. 1,19,950). By 15th June, he should pay 15% of his liability in advance, hence, he should  pay Rs. 17,993 on account of advance tax by 15th June, 2022.

His second installment of advance tax will fall due on 15th September, 2022. His  estimated tax liability for the year is Rs. 1,19,952 which is rounded off to Rs. 1,19,950.

By 15th September he should pay 45% of his tax liability in advance, i.e., Rs. 53,978.  Assuming that he has already paid Rs. 17,993 as advance tax by 15th June, he should pay balance of Rs. 35,985 on account of advance tax by 15th September, 2022. Thus, total payment of advance tax till 15th September will amount to Rs. 53,978.

His third installment of advance tax will fall due on 15th December, 2022. His estimated  tax liability for the year is Rs. 1,19,952 which is rounded off to Rs. 1,19,950. By 15th December, he should pay 75% of his liability in advance, i.e., Rs. 89,963. Assuming that he has already paid Rs. 53,978 as advance tax by 15th September, he should pay balance
of Rs. 35,985 on account of advance tax by 15th December, 2022. Thus, total payment of advance tax till 15th December will amount to Rs. 89,963.
His fourth and final installment of advance tax will fall due on 15th March, 2023. His  estimated tax liability for the year is Rs. 1,19,952 which is rounded off to Rs. 1,19,950. By 15th March, he should pay 100% of his liability in advance, i.e., Rs. 1,19,950. Assuming that he has already paid Rs. 89,963 as advance tax by 15th December, he should pay balance of Rs. 29,988 on account of advance tax by 15th March, 2023. Thus, total payment of advance tax till 15th March will amount to Rs. 1,19,950.

How to Pay Advance Tax for AY 2023-24

As per Rule 125 of the Income-tax Rules, 1962 a corporate taxpayer (i.e., a company)  shall pay taxes through the electronic payment mode using the internet banking facility of the authorised banks.

Taxpayers other than a company, who are required to get their accounts audited, shall pay taxes through the electronic payment mode / Online using the internet banking facility of the authorised banks.

Any other taxpayer can pay tax either by electronic mode or by physical mode /Offline  i.e. by depositing the challan at the receiving bank.

You can make the payment using net banking or debit card

you can pay advance tax online on govt website https://www.incometax.gov.in/iec/foportal

Watch  Video on

How to pay Advance Tax challan for AY 2023-24

Whether Payment of Advance Tax is mandatory . What are the consequeces of not paying Advance Tax or paying less then required .

Payment of Advance Tax in Income Tax is mandatory . The consequences of not paying advance tax or paying less than required are:

• You have to pay interest at 1% per month for non-payment or short payment of advance tax under section 234B
• You have to pay interest at 1% per month for delay in payment of advance tax instalments under section 234C
• You may receive a notice from the assessing officer under section 210(3) to pay advance tax on your current year’s income before the last date of February
•  if a taxpayer fails to pay advance tax, he may face prosecution under section 276C of the Income Tax Act.  If a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to 2 years and shall, in the discretion of the court, also be liable to fine.. However, there are some exceptions and conditions for this provision.

Advance Tax payment by Salaried Employee

Normally TDS is deducted from Salary Income by Employer but there may be other Income like Rental Income, Bank FDR Interest Income etc , Therefore salaries employee have to calcuate their estimated Income for the entire financial year and tax liability  and then they can reduce TDS deducted by employer to arrive at the net Tax liability. This Tax liability if exceeds Rs 10000 then advance tax has to paid by employees also.

Other provison for Payment of advance tax for AY 2023-24

Advance tax can be paid by the taxpayer either on his own account or in pursuance of an order of the Assessing Officer.
The taxpayer who is liable to pay advance tax is required to estimate his current income and pay advance tax on his own account. In such a case, he is not required to submit any estimate or statement of income to the tax authorities.

After making payment of first or second or third instalment of advance tax (as the case may be), if there is a change in the tax liability, then the taxpayer can revise the quantum of advance tax in the remaining instalment(s) and pay the tax as per revised estimates.

Tax can be computed on the current income (estimated by the taxpayer) at the rates in force during the financial year. From the tax so computed, tax deducted or collected at source will be deducted and the balance tax payable will be used to compute the advance  tax liability. Also, relief of tax allowed under section 90 or section 90A or any deduction
under section 91 or any tax credit allowed to be set off as per section 115JAA or section  115JD shall also be deducted while computing the advance tax liability.

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Section 211 Income Tax  is for  Advance Tax Due Dates

section 211 of the Income tax Act, 

Installments of advance tax and due dates [Note-1]

(1) Advance tax on the current income calculated in the manner laid down in section 209 shall be payable by—

a) all the assessees, other than the assessee referred to in clause (b), who are liable to pay the same, in four instalments during each financial year and the due date of each instalment and the amount of such instalment shall be as specified in the Table below

TABLE

Due date of instalment                                       Amount payable

On or before the 15th June                               Not less than fifteen per cent of such advance tax.

On or before the 15th September                    Not less than forty-five per cent of such advance tax, as                                                                                   reduced by the amount, if any, paid in the earlier                                                                                               instalment.

On or before the 15th December                     Not less than seventy-five per cent of such advance tax,                                                                                  as reduced by the amount or amounts, if any, paid in the                                                                                earlier instalment or instalments

On or before the 15th March                          The whole amount of such advance tax, as reduced by the                                                                              amount or amounts, if any, paid in the earlier instalment                                                                                or instalments;

b) 2[an assessee who declares profits and gains in accordance with the provisions of sub-section (1) of section 44AD or sub-section (1) of section 44ADA, as the case may be], to the extent of the whole amount of such advance tax during each financial year on or before the 15th March

Provided that any amount paid by way of advance tax on or before the 31st day of March shall also be treated as advance tax paid during the financial year ending on that day for all the purposes of this Act.”.

(2) If the notice of demand issued under section 156 in pursuance of an order of the Assessing Officer under sub-section (3) or sub-section (4) of section 210 is served after any of the due dates specified in sub-section (1), the appropriate part or, as the case may be, the whole of the amount of the advance tax specified in such notice shall be payable on or before each of such of those dates as fall after the date of service of the notice of demand.

1 Substituted by the Finance Act, 2016, w.e.f. 1-6-2016 .relating to Advance Tax Due Dates

2. Substituted for “an eligible assessee in respect of an eligible business referred to in section 44AD” by the Finance Act, 2017, w.e.f. 1-4-2017.

Analysis of Changes relating to  Advance Tax Due Dates

1. Now Whether Corporate or non Corporate Assessee (Except Assessee to whom section 44AD applies ) are required to pay tax in 4 Installments . on or before 15th June ,15th September,15th December ,15th March
2. Assessee to whom Section 44AD(1) applies are also required to pay Advance Tax on or before 15th March . Thus Professionals allowed to pay advance tax in single installment w.e.f AY 2017-18 u/s 44ADA . In case of Default , interest for default and deferment of advance tax under Section 234B and Section 234C respectively, shall also be levied.

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