Income Tax News: Should you also need to make an advance tax deposit, December 15th is crucial for you. By December 15, the second installment of advance tax for the third quarter of the 2024 fiscal year must be deposited. You will be penalised if you do not pay the advance tax. In addition, there will be interest due for the delay. Tell us what advance tax is and when you are required to pay it each year.
Introduction to Advance Tax
One kind of income tax that needs to be deposited with the Income Tax Department prior to the end of the fiscal year is advance tax. It is deposited in installments rather than being paid in one lump payment each year like regular tax. Under this, taxpayers pay the Income Tax Department in advance for their taxes.
Mandatory Advance Tax Payment
As per Section 208 of the Income Tax Act, individuals with a tax liability exceeding Rs 10,000 are required to pay advance tax. This holds true for those who are employed, independent contractors, business owners, and those who make money in other ways. On the other hand, people who are over 60 and do not operate a business are not required to pay advance tax.
Advance Tax Installments
Unlike regular tax, advance tax must be paid in installments rather than in one large payment once a year. It must be paid on a quarterly basis. The Income Tax Department sets the date. These dates apply to the fiscal years 2022–2023 and 2023–2024 and are June 15, September 15, December 15, and March 15.
Calculating Advance Tax
The advance tax is computed for the full year, even though it is paid in installments. You will need to figure out how much tax you might owe each year beforehand. You can compute tax on the remaining income based on your tax slab after deducting certain items from your income. On June 15, you will be required to pay a minimum of 15% of your advance tax. In contrast, the advance tax payment deadlines are as follows: 50% must be paid by September 15th, 75% by December 15th, and 100% by March 15th.
Impact of Job Change on Advance Tax
When an employee changes jobs, the companies frequently fail to properly deduct TDS, resulting in an advance tax liability. You will be required to verify and deposit the advance tax in this case; if you don’t, you will be assessed a fee and be required to pay interest. Under sections 234B and 234C, there is a penalty for nonpayment of advance tax. Every month, 1% penalty interest is assessed on each section. In the event of an advance tax payment delay or shortfall, Section 234B is applicable. On the other hand, failure to pay or underpay individual advance tax installments is subject to Section 234C.
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