What is advance tax?
Advance tax is deposited by anybody who stands liable to pay an estimated and approximate income tax of ten thousand rupees or more for a particular financial year.
For anybody who qualifies this threshold, the payment of advance tax becomes legally binding.
When to pay advance tax?
It is payable in four installments a year, in every quarter in notified ratios. The dates are:
- 15 percent by June 15
- 45 percent by September 15
- 75 percent by December 15
- 100 percent by March 15
The income tax department levies a penalty on you for missing the advance tax date deadline.
If you are legally responsible to pay advance tax but you dont or you deposit less than 90 percent of assessed tax liability by March 31 as advance tax, then the department will charge you with one percent interest per month or part of month on the amount of advance tax unpaid or short deposited.
What happens if your income or tax slab changes in the middle of the year?
Well, if your tax liability reduces below ten thousand rupees by the middle of the year or at any time after you have deposited the advance tax; you are eligible for a refund of the excess tax deposited. Also, you can claim all deductions including TDS (tax deducted at source) on your estimate of advance tax.