Is your tax liability during the FY 2016-17 exceeding Rs.10, 000? If yes, then you are liable to pay Advance tax. So what is advance tax? Who all are liable to pay advance tax? Let’s discuss the same in this content.

Advance Tax – As per the income tax act if the tax to be paid by an assessee during a financial year exceeds Rs.10, 000 then he /she is liable to pay advance tax. Instead of paying tax at the end of year Advance tax is paid during same the financial year in installments. It is to be noted that from FY 2016-17 taxpayers opting for presumptive taxation scheme are also liable to pay advance tax.

       However a senior citizen not having any income from business or profession is not liable to pay advance tax.

Due date for Payment of advance tax– The due date for payment of different installments of advance tax were previously different for Individual and Company. But from FY 2016-17 the due date for both Individuals and companies are same. The due date for payment of different installments is as follows:

For Individuals and Companies.  

Due Date	Advance Tax Payable
On or before 15th June	Up to 15% of the advance tax liability
On or before 15th September	Up to 45% of the advance tax liability
On or before 15th December	Up to 75% of the advance tax liability
On or before 15th March	Up to 100% of the advance tax liability

In case of an assessee eligible under section 44AD.  100% of the advance tax must be paid by 15^th of March.

Mode of Payment of Advance Tax

Advance tax can be made by electronic mode or by physical mode by individuals. However for corporate tax payers and Individuals liable for audit it is mandatory to pay advance tax online.

Is there any interest on late payment of Advance Tax?

Yes, delay in payment of advance tax attracts interest.  Interests liable to be paid for late payment of advance tax are as follows:

Interest u/s 234C– If the advance tax is not paid as per the slab mentioned above then Interest u/s 234 C is charged @ 1% per month for a period of 3 months on the amount of Shortfall, however for the due date ending 15^th March interest shall be calculated @1% for 1 month on the shortfall. Let us understand this with the help of an example.

Example: Total tax payable by Mr. Rajesh during FY 2016-17 is Rs. 7, 25,000 of which Rs.25,000 has been already deducted as TDS. Rajesh made a payment of Rs. 5000 on 15^th June,Rs.10000 on 15^th September and Rs.5000 on 15^th December towards advance tax.

Solution: As per the income tax slab, tax liability after deduction of TDS on total income is Rs.47100 (72100-25000).

So calculation of advance tax and Interest u/s 234C is as follows:

Due Date	Amount to be Paid	Amount Paid	Shortfall	Interest
Up to 15th June	7065	5000	2065	62 (2065*1%*3)
Up to 15th Sept	21195	15000(10000+5000)	6195	186 (6195*1%*3)
Up to 15th Dec	35325	20000(15000+5000)	15325	460 (15325*1%*3)
Up to 15th March	47100	20000	27100	271 (27100*1%)

Interest u/s 234 B– As per the provisions of Income tax act where the assessee has not paid the 90% of the total tax payable by him before the end of financial year he /she shall be liable to interest @1% for every month or part of the month beginning from 1^st April of next financial year till the date of filing of return.Let us understand this with the help of an example.

Example: Mr. Gopal has a total tax liability of Rs.2, 00,000 for FY 2016-17 out of which he has already paid Rs.75, 000 as advance Tax. He paid the balance amount of tax on 17^th July.

Solution: Mr. Gopal will have to pay interest u/s 234B since the amount of tax paid by him at end of FY 2016-17 is less than 90%. Therefore interest 234B is Rs. 125000(200000-75000) *1%*4 (April-July).

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