Advance Tax is a form of income tax calculated on your estimated annual taxable income. It is paid in four quarterly instalments throughout the financial year, hence it is also known as “pay-as-you-earn” scheme.
Based on your estimated total taxable income for the financial year, if your tax liability exceeds Rs 10,000, after TDS deduction, you are required to pay advance tax.
Read this article by H&R Block to calculate and pay your advance tax on time and avoid late payment penalties.
Important Note: 15th June 2019 is the due date to pay the 1st Installment of Advance Tax for FY 19-20.
In general, if you are a salaried individual, you need to pay advance tax only if you have additional income such as capital gains on shares, rental income, interest on fixed deposits, winnings from lottery, etc.
Under section 207 of the Income Tax Act (1), resident senior citizens are exempt from paying advance tax if they do not have any profits or gains from business or profession.
You are expected to pay a percentage of total advance tax payable according to the following dates for the F.Y. 2019-20:
|Due Date||Advance Tax Payable|
|On or before 15th June||15% of estimated advance tax|
|On or before 15th September||45% of estimated advance tax less advance tax already paid|
|On or before 15th December||75% of estimated advance tax less advance tax already paid|
|On or before 15th March||100% of estimated advance tax less advance tax already paid|
Side Note: The due date for persons under the presumptive scheme is 31st March for 100% of the tax payable.
|List of Authorised Banks|
|Allahabad Bank||Andhra Bank||Axis Bank|
|Bank of Baroda||Bank of India||Bank of Maharashtra|
|Canara Bank||Central Bank of India||Corporation Bank|
|Dena Bank||HDFC Bank||ICICI Bank|
|IDBI Bank||Indian Bank||Indian Overseas Bank|
|Jammu and Kashmir Bank||Oriental Bank of Commerce||Punjab & Sindh Bank|
|Punjab National Bank||State Bank of India||Syndicate Bank|
|UCO Bank||Union Bank of India||United Bank of India|
Side Note: In case your bank is not listed under Net banking/Debit card payment, someone else holding an account with any of the authorised banks, can make the payment on your behalf.
Side Note: After the payment of Advance Tax, it takes up to 10 days for it to reflect in Form 26AS.
Time is money, and we at H&R Block, have designed a free Advance Tax Calculator for you, as we want to save your time, not just money. Use it for an accurate estimate of your advance tax liability in just a few minutes!
Under section 234B, if you default an advance tax payment instalment or pay less than the amount due, there will be an interest penalty levied.
A. If you have paid advance tax, it will reflect in your form 26AS.
A. No, this rule does not extend to Hindu Undivided Families (HUFs).
A. Yes, you are eligible for advance tax exemption for the year you turn 60 years of age.
A. No. If the bank is closed on the last day of payment of an instalment, you can make the payment on the next working day, without getting penalized.
A. Yes, you can pay the remaining amount by 31st March. It will still be considered as advance tax.
A. Based on your calculations after considering TDS and advance tax, if there is any balance tax to be paid for the income earned in the previous financial year, you must pay self-assessment tax in the assessment year.
Example: You paid advance tax for FY 2018-19 based on an estimation of your income. Before filing your income tax return, you realize that you have paid less tax than what was required. In this case, you are liable to pay the balance amount in AY 2019-20, called as “self-assessment tax”.
Advance Tax mechanism ensures a constant flow of income for the government to manage expenses incurred. Paying advance tax is one of your most important responsibilities and the onus is on you to promptly perform this duty.