The term “advance tax” describes the portion of income tax that must be paid in instalments by the deadlines rather than all at once. Both individuals and businesses must pay income tax in advance in recurring instalments rather than in one lump sum.
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If taxpayers’ income tax liability exceeds ₹10,000, they must pay advance tax; otherwise, they will be subject to penalties and penal interest. Therefore, for FY 2024–2025, the third instalment of advance tax must be paid by December 15, 2024, in the third quarter.
Advance tax payment: Who all are exempted?
“Resident senior citizens who were 60 years of age or older during the relevant financial year and do not have income from business or profession are exempt from the requirement of paying advance tax,” stated Mumbai-based tax and investment specialist Balwant Jain.
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You can avoid interest penalties under Sections 234B and 234C of the Income Tax Act by paying your advance tax by December 15.
Hers is how much you can save if you pay advance tax on time
“If you delay or fall short in paying advance tax, you’ll incur interest at a rate of 1% per month (12% annually). Any delay, even one day beyond the due date, incurs interest for three months. For instance, if your advance tax liability is ₹1 lakh and you fail to pay the ₹30,000 due on December 15th, you’ll have to pay an interest of ₹900 for that default, even if paid on December 16th,” explained Balwant Jain, a tax and investment expert based in Mumbai.” explained Balwant Jain, a tax and investment expert based in Mumbai.
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” For example, if your total tax liability is ₹1,00,000. By not paying the third advance tax instalment of ₹75,000 (75% of tax) by December 15. You’ll pay 1% interest on the shortfall for each month until payment. Hence, timely advance tax payments save you money and help you maintain a clean tax compliance record,” said Abhishek Soni, CEO and Co-founder of Tax2win.
Deadlines for advance tax payments:
June 15: 15% of the advance tax must be paid.
September 15: Deduct any already paid taxes and pay 45% of the advance tax.
December 15: After deducting any taxes that have already been paid, pay 75% of the advance tax.
March 15: Deduct any already paid taxes and pay the remaining advance tax balance.
