Advance Tax : Applicability, Due Date, Consequences, Example

What is advance tax ?  

Advance Tax means income tax paid in advance instead of lump sum payment after year end. It is also known as pay as you earn tax. Advance tax is calculated by estimating the current year’s annual income and finding tax liability on such estimated annual income. These payments have to be made in installments as per its due dates. 

Particulars	Amount
Estimated Annual Tax Liability	XXX
Less: TDS / TCS / MAT Credit	(XXX)
Annual Advance Tax Liabilty	XXX

Who is liable to pay advance tax ?

If an assessee’s tax liability is Rs. 10000/- or more in a financial year than they have to pay their whole income tax liability in advance.

Exemption from Advance Tax : 

Resident Senior citizens (i.e. age 60 years or more) who do not have any income from  business/profession.

Due Dates for payment of Advance Tax :

Due Date	Advance Tax Payable
15th June of FY	upto 15%
15th September of FY	upto 45%
15th December of FY	upto 75%
15th March of FY	100%

Due date for tax payer who has opted for presumptive taxation scheme u/s 44AD or 44ADA will be 15th March of FY only. Other due dates will not be applicable to such taxpayer but he has to discharge his 100% advance tax liability before 15th March of FY.

Consequences Non-payment of advance tax :

It will result in levy of interest under 234B and 234C of Income Tax Act,1961

Example : 

Lets Suppose Mr. Vicky has Estimated Annual Tax liability of Rs. 100000/- He has no TDS/TCS

Then he has to pay advance tax in following installments : 

Due date	Advance Tax Payable	Calculation	Amount Payable
15th June	Upto 15%	15% of 100000	15000
15th September	Upto 45%	45% of 100000 (45000-15000)	30000
15th December	Upto 75%	75% of 100000 (75000 – 45000)	30000
15th March	100%	100% of 100000 (100000 – 75000)	25000