Last Date to Pay Advance Tax Installment Today; Hurry to Avoid Financial Consequences

We sometimes hear about entrepreneurs or movie stars paying crores of rupees in advance taxes. The deadline for paying advance tax for the financial year 2024-25 is 15th March. Individuals who owe more than Rs.10,000 in total tax for the year are required by law to pay advance tax.

How to Calculate Advance Tax?

Calculating and paying advance tax requires a series of processes, and accuracy is essential to avoid penalties. Here is a breakdown given for this.

Advance Tax Calculation

• Start by determining your total income for the financial year. This comprises all types of income, such as salary, business, profession, capital gains, rent, interest, and any other.
• Apply all eligible deductions and exemptions from the Income Tax Act. This could include deductions under Sections 80C, 80D, and others, depending on the tax regime you’ve chosen. Remember the changes in deductions allowed under the old and new tax regimes.
• Calculate the tax payable on your expected taxable income using the applicable income tax slab rates.
• Deduct any previously deducted TDS or TCS from your income.
• If the resulting tax liability exceeds Rs 10,000, you must pay advance tax.

Divide your advance tax amount into the necessary installments and pay accordingly: 15% by 15th June, 45% by 15th September, 75% by 15th December, and 100% by 15th March.

Consequences of Missing Advance Tax Payment

Missing advance tax payments can have financial ramifications, primarily in the form of interest fees.

Interest under Section 234B

This occurs when a person fails to pay at least 90% of their total tax liability as advance tax. Interest is imposed at 1% per month or part of a month on the shortfall from April 1st of the assessment year until the payment date.

Interest under Section 234C

This section addresses the deferral of advance tax installments. If you fail to pay the requisite percentage of advance tax by the stated due dates (June 15, September 15, December 15, and March 15), you will be forced to pay interest of 1% per month or part of a month on the deficient amount.

How to Pay Advance Tax?

1. Go to the Income Tax Department’s e-filing portal.

2. In the ‘Quick Links’ area, select the ‘e-Pay Tax’ option.

3. Enter your PAN and mobile number, then verify them with the OTP given to your phone.

4. Choose the relevant tax category under ‘Income Tax’.

5. Choose a payment method and enter the tax amounts you need to pay.

6. Choose your preferred method (net banking, debit/credit card, or UPI).

7. Review the challan information and click ‘pay now’ to finish the transaction.

8. Download and keep the tax receipt for your records.