Most of the people in India are quite unaware of the concept of Advance Tax. They assume that payment of total tax before or at the time of filing returns is enough. But that is as far from truth as it gets. Income Tax rules require tax payers to pay the tax before the end of financial year if the tax for the year is more than Rs. 10,000. For salaried individuals, tax deducted at source by employer takes care of the advance tax but if he or she has other sources of Income then payment of advance tax would be necessitated. Other income sources in this case include capital gains, income from house property, income from business, lottery winnings etc.
Who should pay advance Tax
As mentioned earlier, salaried individuals do not have to pay this tax unless the income from sources other than salary exceeds the tax payable by Rs. 10,000. Businessmen and self-employed professionals who’s total tax liability is expected to exceed Rs. 10,000 should always pay advance taxes. For businesses who have applied for presumptive scheme, the entire amount of advance tax needs to be paid in one installment before 15th March. All those cases where tax is deducted at source are exempt from paying advance tax as tax on their income is already deposited.
Due Dates of paying Advance Tax
Now a financial year in India starts from 1st April and ends on 31st March of the next year. Tax payer needs to pay advance tax on or before 15th June (Quarter ended), 15th September (half year ended), 15th December and March. The total tax is to be paid is uniformly divided over these four due dates as 15%, 45%, 75% and 100%.
Payment of Advance Tax
One can make payment through any of the authorised banks that include SBI and its associates, ICICI and HDFC bank amongst others. Across India, 926 branches of these authorized banks can accept and credit the advance tax payment. With income Tax department moving toward digitization, advance tax payment has now become possible online as well. You can simply make payment through IT Department or NSDL’s (National security Depository) website.
Failure to pay Advance Tax
If you fail to pay advance tax on time as per due date schedule then it attracts penalty of 1% every month on defaulted amount. This is a hefty rate of 12% simple interest. The interest is levied until it is cleared off by making the payment. At the same time, if the advance tax paid is more than what was required then tax payer can claim refund of the excess amount. If the excess amount exceeds the final tax liability by 10% then department is liable to pay interest at the rate of 6% per annum in addition to the refund.
How Letzbank can help you with taxation and other Services
If you are a tax payer and required to pay advance tax then visit us on letzbank. We have tie up with India’s leading income tax return portal - Clear Tax. You can file your return on this portal. It is easy to navigate, understand and use. We also have extensive loan solutions for your every fund need. Whether it is your dream home or that swanky car, our loans from the best names of the lending sector cater to your every need.
Other important services of Letzbank include loan eligibility calculator, a complete practical guide on how to improve credit score and credit score calculator powered by world renowned Experian system. Another awesome service Letzbank provides is E-document locker which enables you to store the soft copies of your documents in an e-locker which is accessible by the client through username and password. With this locker, one can access important documents like certificates, passport, PAN card, Aadhaar card etc anywhere in the world without carrying them around which actually poses considerable risk of damage to them.