We are in the middle of the month of March wherin we are surrounded by thoughts of payment of advance tax and due date for payment of advance tax for the 4^th and the last quarter is just a day ahead.  

Advance tax need to be paid if the income tax liability of any taxpayer is more than Rs. 10,000 in a financial year. It is paid in installments during the year itself. If a taxpayer fails to pay advance tax or the amount paid is less than the mandate installment then, interest is to be paid @ 1% simple interest p.m on defaulted amount for 3 months. Failing to pay the last installment, (15 March) would mean paying 1% simple interest on the defaulted amount for every month until the tax is fully paid.

For Corporate Assessee :

Due Date of installment                  Amount Payable

15^th June                                            15% of total tax liability

15^th September                               45% of total tax liability

15^th December                                                75% of total tax liability

15^th March                                         100% of total tax liability

 

For Non Corporate Assessee: 

Due Date of installment                  Amount Payable

15^th September                               30% of total tax liability

15^th December                                                60% of total tax liability

15^th March                                         100% of total tax liability

 

Advance Tax to be paid by 15^th March:

Total Tax liability

Less: Expected amount of TDS effected by client

Less: Tax Paid till December Installment

 

Note: Any amount paid by way of Advance Tax on or before 31st March of that year, is treated as Advance Tax Paid during that Financial Year.

Jumped out of your chair after reading this?? But, you need to hold on… You all must have heard “ little knowledge is very dangerous”… So, you must read ahead.  

Though payment till 31^st March is considered as advance tax but there are few things to be noted.

 

Consequences of payment of advance tax after 15^th March but before 31^st March –

Interest u/s 234C for deferment of advance tax: 1% p.m for 1 month if:

• Advance Tax paid on or before 15^th March     <   Tax due on returned income

OR

•  No tax has been paid by the assessee

Interest u/s 234B for default in payment of advance tax: NIL

Every assessee shall pay their advance tax liability by due date i.e. 15^th March to avoid interest @ 1% u/s 234C and to duly comply with all the compliances.

In a case if, an assessee does not have money for payment of advance tax then, he shall take loan from bank for 15days @ Re.1 p.m (12%p.a). Now, he shall pay his advance tax within the due date to avoid interest payment of 1%.

Instance:

Advance tax due – Rs. 100

Interest paid to bank – Re. 0.5

Interest saved u/s 234C – Re. 1 (1% of Rs. 100)

Therefore, ultimate saving – Re. 0.5

Thus, every assessee shall pay their advance tax on or before 15^th March.

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