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September 15, 2021

Know if you are liable to pay Advance Tax by 15th September 2021

by Mahesh Mara in Income Tax

Know if you are liable to pay Advance Tax by 15th September 2021

Every individual has certain responsibilities under different laws and when it comes to the Income Tax Act. One of the primary responsibilities is to pay the required tax on the income earned during the year. There are various ways in which the tax will be paid and this covers self-assessment tax, tax deducted at source, advance tax and tax on assessment.

Advance tax is the tax that is paid in advance for the income of a particular financial year. The normal expectation is that tax has to be paid only when the income is earned but under the tax provisions the tax payer has to actually estimate the income for the entire year and based on this pay advance tax at specific time intervals.

When shall a person be liable to pay advance tax?

  • A Person Shall be liable to pay advance tax only if Tax Liability exceeds Rs. 10,000 i.e. a person shall be exempt from payment of Advance Tax If Tax Liability does not exceed Rs. 10,000.
  • The Education Cess and Secondary Higher Education cess shall also be considered for the purpose of calculating the Tax Liability.
  • A Senior Citizen who does not have Income under head Business or Profession shall be exempt from the Payment of Advance Tax.

What are the due dates of payment of advance tax?

Due date for both individual and corporate taxpayers are as follows

Due DateAdvance Tax Payable
On or before 15th June15% of advance tax
On or before 15th September45% of advance tax less advance tax already paid
On or before 15th December75% of advance tax less advance tax already paid
On or before 15th March100% of advance tax less advance tax already paid

For taxpayers who have opted for Presumptive Taxation Scheme under section 44AD & 44ADA – Business Income

Due DateAdvance Tax Payable
 On or before 15th March100% of advance tax

What is the amount of Interest on default in paying advance tax?

Interest under section 234B is applicable when:

Tax liability after reducing TDS for the financial year is more than Rs 10,000 and one does not pay any advance tax.

or

One has paid advance tax, but advance tax paid is less than 90% of ‘assessed tax’.

In any one of the above cases, interest under section 234B shall be applicable. Interest is calculated @ 1% on Assessed Tax less Advance Tax. Part of a month is rounded off to a full month. The amount on which interest is calculated is also rounded off in such a way that any fraction of a hundred is ignored.

Interest under section 234C is applicable when:

The interest for late payment is set at 1% on the amount of tax due. It is calculated from the individual cut off dates, till the date of actual payment of outstanding taxes. Computation of interest under Section 234C is as follows:

 Rate of InterestPeriod of InterestAmount on which interest is calculated
If Advance Tax paid on or before June 15 is less than 15% of the AmountSimple interest @1% per month3 months15% of Amount (-) tax already deposited before June 15
If Advance Tax paid on or before September 15 is less than 45% of the AmountSimple interest @1% per month3 months45% of Amount (-) tax already deposited before September 15
If Advance Tax paid on or before December 15 is less than 75% of the AmountSimple interest @1% per month3 months75% of Amount (-) tax already deposited before December 15
If Advance Tax paid on or before March 15 is less than 100% of the AmountSimple interest @1% per month 100% of Amount (-) tax already deposited before March 15

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