As the name “Advance Income Tax” suggests Advance tax payments means paying the tax in advance rather than paying it in one lump sum amount.  This tax is required to be paid by every person who is earning the income from the sources like salary, rent, capital gains, fixed deposits and lottery winnings etc.  This tax is paid as the income is earned that is why it is also known as the pay as you earn tax.  Here we will be taking a look at the various provisions related to the Advance Income Tax as stipulated under the Income tax Act.

What is Advance Income Tax?

Advance income tax is the amount of tax that is to be paid by person as and when the income is earned and not later than that.  This tax is also known as the pay as you earn tax as it is paid as the income is earned. This tax is required to be paid by the eligible person only if his tax liability for a year exceeds the total amount of 10,000 rs.

What is the applicability of Advance Income Tax?

The advance tax in India by every entity who earns the income from any of the below mentioned sources and his total tax liability exceeds the limit of 10,000 –

  • Income received via capital gains on shares
  • Interest earned on fixed deposits
  • Winnings earned from a lottery
  • Rent or income earned from house property

One additional thing to be noted here is that  the advance income is required to be paid on salaries also in case the Tax Deducted at Source is not deducted by the company while paying the salary to their employees.

Which are the exempted categories for Advance Income Tax in India?

Senior Citizens – The citizens who are of age 60 years or older are considered as senior citizens and are exempted from paying any kinds of Advance Income tax.

Business units who opted for Presumptive Scheme– Every taxpayer who have opted for this scheme under section 44AD are required to pay the complete amount of tax in one go only on or before 15 March or  by 31 March.

Professionals who opted for Presumptive Scheme – Apart  from the business units the independent professionals like the doctors, lawyers, architects can also be registered under the presumptive shceme under Section 44ADA. They are also required to pay the whole amount of tax in one go only on or before 15 March or by 31 March.

What are the due dates of paying the Advance Income Tax in India?

The business units and the individual taxpayer are required to pay the advance income in instalments. The due dates for paying the advance income tax are as follows –

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

 

What is the process of paying the advance income tax?

In order to pay the advance income tax the applicant can simply go to the official government site, select the right challan, fill in required details, make the payment and your tax be paid.