Have you received a notification from the Income Tax department regarding the payment of Advance Tax? Well, fret not, you are not the only one. The ITD has been sending these notifications as a reminder to taxpayers who have paid Advance Tax in the last Financial Year.
The communication also states that the department is maintaining a database to monitor the compliance of the taxpayers. It also contains the details of the Advance Tax paid by the assessees in the last Financial year.
What is Advance Tax?
Advance Tax is a “pay-as-you-earn” scheme for the periodical payment of your yearly tax in advance. It needs to be paid if your outstanding Tax Liability is INR 10,000 or more. Advance Tax can be paid in 4 equal instalments at an equal time gap.
The following table shows the due date of paying Advance Tax for each quarter
| Due Date of Installment | Amount Payable |
| On or Before 15th June | 15% of the Advance Tax |
| On or Before 15th September | 45% of the Advance Tax |
| On or Before 15th December | 75% of the Advance Tax |
| On of Before 15th March | 100% of the Advance Tax |
The due date to pay the second instalment of Advance Tax is quite near and the ITD had sent this notification as a reminder for people to pay the second instalment of Advance Tax.
Wondering how to calculate Advance Tax? Check out our Advance Tax Calculator
Who has to pay Advance Tax?
Any individual having an outstanding Tax liability of INR 10,000 or more is liable to pay Advance Tax.
Individuals having only salary income usually don’t have to pay advance tax, since their employers deduct TDS. However, what is often overlooked is the fact that if a salaried individual has income from other sources like trading, investment, rent then that person may be liable to pay Advance Tax as well. In other words, having any sort of non-salaried income may make one eligible for paying Advance Tax.
Advance Tax for Investors & Traders
Traders are liable to pay Advance Tax for their realised profits & gains. However, given that the income of traders keeps changing every month (every day…actually😅), it can be quite difficult to pay the accurate amount of Advance Tax every quarter. So, they can go for either of the following options
Option 1: Estimate incomes for each quarter
Traders can pay Advance Tax at the end of each quarter by estimating their trading income. If they pay more than their actual liability then they can claim a refund while filing their ITR. If they pay less than the actual Tax Liability, an interest of 1% per month or part thereof on the differential amount has to be paid u/s 234C
Option 2: Pay pending Tax on or before 31st March.
Capital gains can be difficult to estimate. Hence, taxpayers can pay Advance Tax on the realised profit for that quarter. However, later on, if the tax liability is more than what they have paid, they can clear up all their dues on or before 31st March to avoid any interests.
Where does Quicko come in?
Calculating and remembering to pay advance Tax can be quite a task. That’s why our Tax Planner is here to help you out.
- Log in with your broker
- Add other Incomes & Tax credits
- Navigate to Planning & then click on Advance Tax
- Check out how much Advance Tax to pay, due dates & other details
- Click on Pay
Yep, that’s it. We have made it that easy for you to calculate and pay Advance Tax😎
Need help with Advance Tax? Well, let our experts guide you through.
Want to know more? We would love to hear you out. Just drop in your contact details & message. We will get back to you with applicable plans, discounts and more in light’s speed (okay that might be an exaggeration, but we promise to get back to you fast enough)
Hey @Shweta_Saini
Advance tax is a ‘Pay as you earn’ tax, so it is required to be paid during the financial year in four different instalments in case your Taxable Liability is more than INR 10,000 for the financial year which stands true for you.
The due dates for advance tax installments are:
If you are eligible to pay advanced tax but have not paid advance tax, the penalty will be applicable u/s 234B and 234C.
Let us know if you have any further questions!
Hi Team, I had assumed that I will be able to pay advanced tax before March because I thought I could go for presumptive tax filing. But now it looks like I cannot opt for a presumptive taxation scheme. So does it mean that I did not pay the advanced quarterly tax that I was supposed to pay?
If yes, what is the penalty in every case or are there some exceptions to avoid this interest penalty?
Thanks in advance!
Hey @riya_gupta
You will be charged an interest penalty under section 234C for the delay/non-payment of advance tax during the year @1% per month on the shortfall amount. Additionally, under Section 234B a penalty interest is imposed on the taxpayers in case the advance tax payment is less than 90% of assessed tax liability during the year.
You can avoid interest u/s 234B by paying at least 90% of your assessed tax liability by March 15, 2021.
Hope this helps!
Hey @TeamQuicko
I have LTCG of more than 7 lakhs from the equity for this year. Is there a way to reduce my tax liability? Also, do I have to pay the tax in advance? If I fail to do so, what will be the penalty/interest percentage I have to pay during my tax filing in 2020?
Hey @ViraajAhuja47, you can set off against non-speculative business loss like F&O for the current year. Long-term capital losses for the previous as well as the current year. Yes, you are required to pay advance tax in case your tax liability is more than INR 10,000 for the FY. The penalties for non-payment of advance tax are:
Non-payment of Advance Tax u/s 234B 3: Interest at 1% in case the taxpayer fails to pay 90% of the tax liability in the same FY
Delay in Payment of Advance Tax u/s 234C 1: if there is a delay in tax payment than interest @ 1% is applicable.