Alert! Advance tax due date is Approaching; Know the implications if not Paid

One needs to pay Advance Tax If the total computed tax for the year exceeds Rs.10,000. The fourth instalment of advance tax payment for FY 2021-22 is due on March 15, 2022, and all advance tax liability must be paid by this date. Calculate your advance tax liability and make sure to pay the advance tax instalment on time to avoid penal interest.

For salaried individuals, the employer withholds tax on the salary income and remits this tax to the government. However, if there are income from other sources on which TDS has not been deducted or if the tax deducted is not sufficient to cover the tax liability on the income, one needs to pay Advance Tax if Tax Liability exceeds Rs.10,000.

If you fails to pay the advance tax liability or misses any of the instalments on or before the specified due dates, or if there is a payment shortfall, the due amount will accrue interest at a rate of 3% per quarter for the first three quarters and 1% for the final quarter. Individuals will also be required to pay additional interest on the shortfall of advance tax beginning in April (after the end of the fiscal year) at the rate of 1% per month if the advance tax paid by such an individual is less than 90% of the total tax payable.

“Interest shall be payable under section 234B of the Act if the total advance tax paid is less than 90 percent of the assessed tax or if the entire advance tax has not been paid. “On account of such default, interest at the rate of one percent per month shall be payable from the beginning of the assessment year until payment thereof.”

As the due date for payment of the final instalment of advance for the Financial year 2021-22, approaches, it is recommended that you evaluate your advance tax liability in advance and pay it on time.