How to Calculate & Pay Advance Tax?
Advance tax means Income Tax should be paid in advance instead of lump sum payment at year end. These payments have to be made in installments as per due dates provided by the income tax department.
Who should pay Advance Tax?
Salaried, freelancers and businesses– If your total tax liability is Rs 10,000 or more in a financial year you have to pay advance tax. Advance tax applies to all tax payers, salaried, freelancers, and businesses.
Senior citizens, who are 60 years or older, and do not run a business, are exempt from paying advance tax.
When to Pay Advance Tax for FY 2020-21?
Payment of Advance Tax
- First Instalment- by 15th June every year you have to pay 15% of tax liability.
- Second Instalment- by 15th September you have to pay 45% of tax liability.
- Third Instalment- by 15th December you have to pay 75% of tax liability.
- The fourth Instalment- by 15th March you have to pay 100% of tax liability
Business / Professional assesse declaring income under the presumptive income scheme u/s 44AD or 44ADA also have to pay whole of the advance tax by the 15th March of the Year. However, any amount deposited by 31st March is treated as advance tax of that financial year.
