As the calendar year draws to a close, the deadline for third instalment of advance tax for income tax payers is set to expire today. Tax payers with overall tax liability of over ₹10,000 are supposed to pay their income tax in four instalments as the year rolls on – and the deadline of third instalment falls on December 15.
What is advance tax?
At the outset, let us understand what is advance tax. When income tax is paid in advance during the financial year rather than at the year’s culmination — it is known as advance tax. It should be paid in four instalments on the prescribed dates set by the income tax (I-T) department.
Deadlines to clear advance tax liability:
1. On or before June 15 of the financial year, 15 percent of the advance tax should be paid.
2. On or before September 15, a total of 45 percent of the advance tax should have been paid (including the first instalment)
3. By December 15, 75 percent of the advance tax should have been paid (including previous instalments).
4. By March 15, 100 percent of the advance tax must be paid.
It is vital to note that there are some categories of tax payers not liable to pay advance tax. “A resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession is not liable to pay advance tax,” reads Income Tax India portal.
Presumptive tax scheme
A person engaged in business or profession is supposed to maintain regular books of account and get them audited. Small taxpayers, however, can spare themselves of the trouble of making the accounts and getting them audited by sticking to presumptive taxation under sections 44AD, 44ADA and 44AE.
Taxpayers who opted for presumptive taxation scheme of section 44AD or section 44ADA are supposed to pay 100 percent of advance tax by March 15 whereas all other assesses must pay in four instalments for advance tax in June, September, December and March.