Advance Tax

Advance tax means income tax should be paid in advance instead of lump sum payment at year end. It is also known as pay as you earn tax. These payments have to be made in installments as per due dates provided by the income tax department.

Note: Assessee is required to pay Advance Tax if his liability for advance tax is Rs 10,000 or more.

Due Dates for payment of Advance Tax:

FY 2020-21 for both individual and corporate taxpayers

Due Date Advance Tax Payable

• On or before 15th December - 75% of advance tax less advance tax already paid
• On or before 15th March - 100% of advance tax less advance tax already paid

Failure in payment of Advance Tax:

Non payment of advance tax will result in levy of interest under 234B and 234C of the Income tax Act, 1961.

Interest Under Section 234B:

Interest @ 1% per month or part of month is paid on advance tax not paid or short paid till the date of actual payment is made.

Note: Interest under section 234B is not applicable if assessee paid 90% or more of advance tax payable.

Interest Under Section 234C:

Interest is charged at 1% of the total outstanding due on the advance tax payable. It is calculated from the individual cut off dates separately till the date on which the due tax actually gets paid.

Interest under section 234C is levied, if advance tax paid in any installment(s) is less than the required amount. In other words, interest under section 234C in case of deferment of different installments of advance tax is levied in case of taxpayers interest shall be levied

• If advance tax paid on or before 15thJune is less than 12% of advance tax payable
• If advance tax paid on or before 15thSeptember is less than 36% of advance tax payable
• If advance tax paid on or before 15thDecember is less than 75% of advance tax payable
• If advance tax paid on or before 15thMarch is less than 100% of advance tax payable

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