Table of Contents
If your total tax liability for the financial year is expected to exceed ₹10,000, you are required to pay advance tax. This is essentially a ‘pay as you earn’ scheme introduced by the Income Tax Department to ensure a steady flow of revenue throughout the year.
Who needs to pay Advance Tax?
Advance tax applies to all taxpayers, including salaried individuals, freelancers, and businesses. However, senior citizens (aged 60 years or above) who do not have income from a business or profession are exempt from this requirement.
Payment Deadlines
If you fail to pay your advance tax on time, you will be liable to pay interest as a penalty. Under Section 234C, interest is charged at 1% per month for the short-paid amount for the period of delay. Under Section 234B, if your advance tax payment is less than 90% of your assessed tax, an additional 1% per month is levied from the beginning of the assessment year. Staying compliant with advance tax deadlines not only saves you from heavy penalties but also eases your cash flow burden at the time of filing your final return.
Penalties under Section 234B and 234C