ADVANCE TAX - WHAT,WHOM,WHEN,HOW,LEGAL ASPECTS AND BENIFITS
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As per section 234 B, you must pay at least 90% of the total taxes as advance tax by 31st March. Failure to make advance tax payment will result in an interest @ 1% on the unpaid amount.
| Delay in payment of advance tax will attract interest under 234C: | |||
| Due Dates | Rate of Interest | Period of Interest | Amount on which interest is calculated |
| June 15 If Advance Tax paid by 15th June is less than 15% | 1% per month | 3 months | 15% of Amount* (-) tax paid before June 15 |
| September 15 If Advance Tax paid by 15th September is less than 45% | 1% per month | 3 months | 45% of Amount* (-) tax paid before September 15 |
| December 15 If Advance Tax paid by 15th December is less than 75% | 1% per month | 3 months | 75% of Amount* (-) tax paid before December 15 |
| March 15 If Advance Tax paid by 15th March is less than 100% | 1% per month | 1 month | 100% of Amount* (-) tax paid before March 15 |
- Avoid interest: It is mandatory for taxpayers to deposit advance tax on a timely basis. If you do not pay advance tax on the due date, you must pay interest on the amount due. Thus, paying advance tax helps you avoid interest penalties.
- Avoids tax default: Paying advance tax helps you avoid unwittingly non-paying income-tax dues. If you fail to pay your tax liabilities on time, you may face negative consequences, such as interests, penalties, or any other legal consequences.
- Reduce tax burden: You can spread your tax liability over the year by paying taxes in advance rather than confronting a huge tax bill at the end of the financial year. This reduces the financial strain and allows for a more balanced approach to tax payment.
- Better financial planning: Paying advance tax requires estimating your taxable income for the financial year and making corresponding tax payments in instalments. Hence, it encourages better financial planning and budgeting, allowing you to manage your cash flows effectively.
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