Income Tax News: Pay Your First Advance Tax Installment by THIS Date, IT Department Issues Notice

Income Tax News: Paying your income tax in advance, as opposed to in one single payment at the end of the fiscal year, is known as advance taxation. Under this arrangement, taxpayers must calculate their annual estimated tax burden and make installment payments. By June 15, 2024, the first installment for the fiscal year 2024–2025 is due.

Who Needs to Pay Advance Tax?

Any individual with an expected tax burden for the financial year of Rs 10,000 or more is subject to advance tax. This covers businesses, freelancers, and paid staff. Senior citizens who live in the area and do not earn money from a business or profession are not required to pay advance tax.

Why Pay Advance Tax?

Paying advance taxes on time ensures that the government has a consistent stream of revenue throughout the year, which facilitates the delivery of public services. It helps taxpayers avoid interest and penalties for underpaying taxes, as well as lessens the pressure of a sizable tax payment at the end of the year.

How to Calculate Advance Tax?

You must estimate your annual income, deduct any applicable taxes, and then compute the advance tax on the net income. You must pay advance tax if your estimated tax amount is Rs 10,000 or above. The payments are dispersed over the course of the year:

15th June: 15% of the estimated tax liability
15th September: 45% of the estimated tax liability
15th December: 75% of the estimated tax liability
15th March: 100% of the estimated tax liability

How to Pay Advance Tax?

You can use specific banks or the official Income Tax Department website to make advance tax payments online. Make sure you complete the details accurately and with the appropriate challan (Challan 280).

Consequences of Not Paying Advance Tax

Under Sections 234B and 234C of the Income Tax Act, there may be interest charged for underpayment or failure to pay advance tax. If there is a shortage or no payment, interest is assessed at 1% monthly.

An essential component of tax planning for high-income individuals and businesses is paying advance taxes. Estimating and paying your tax liability in advance will spare you from the anxiety of having to pay your taxes at the last minute and facing penalties. As the deadline of June 15th draws near, make sure you verify your eligibility and send in the required payment to abide by the rules and properly handle your financial obligations.