Pay the third installment of advance tax by 15th December. What if the advance tax is not paid?
Advance tax has to be paid by the taxpayer in four installments, as under:
- The first is due on 15 June each year whereby 15% of the tax liability need to be paid.
- Second is by 15 September wherein 45% of the tax liability need to be paid
- Third installment is due on 15 December 75% of the tax liability need to be paid
- Last installment i.e., fourth installment is due on 15th March whereby 100% of the tax liability need to be paid.
Now, by 15th December i.e., taxpayer need to pay tax to the extent of 75% of anticipated total tax. While working out advance tax, deduction under Chapter VI-A towards LIC, PPF etc can also be considered. Also, the amount of TDS can also to be considered and on the balance amount only advance tax liability arises..
If total estimated tax liability for the year is likely to exceed Rs. 10,000, the liability of advance tax arises. Its not only income earned till 15th December that attracts Advance tax but all other income that is likely to accrue till 31st March also need to be considered.
A resident senior citizen who is an individual of age 60 years or more and not having income from business & profession is not exempted form the liability to advance tax
In case of salaried employee, the liability to deduct tax (TDS) is on the employer and hence there is no liability of advace tax in suh case. However, if the employee have other income apart from salary like Interest, Rent. etc which is not considered by the Employer while doing TDS then the liability of advance tax would arise.
Taxpayer who are opting for presumptive taxation scheme are not liable to pay the first three installment of advance tax. They can pay entire advance tax amount in one single installment of 15 March.
The mode of making advance tax is simple and can be done log in at income tax website at www.incometaxindia.gov.in wherein “e-Payment of Taxes” tab is there. It is self explanatory after every click. Upon successful payment, challan is displayed on the screen which contains all the required details of the payment. Within some time, it also get displayed on the 26AS of the taxpayer. Offline payment can also be done for which taxpayer need to approach the designated bank branch and fill the challan form and pay the taxes.
An important question arises- what if the advance tax is not paid in time. The broader consequences are as under:
- Interest liability arise u/s 234A of the Income Tax Act-1961.
- If tax remained unpaid till 31st March, then interest liability u/s 234B would also arise.
- Non payment of advance tax result in more monitoring by the tax department as most of the information are handy with the income tax department.
- Regular payment of advance tax result in conveying the fact of having income. It helps the assessee if any survey or search is carried out in the middle of the year. Now, the consequences of concealment is higher and advance tax is one of the tool in in the hands of the taxpayer to convey that they have income.
- If no advance tax is paid, the tax is required to be paid at the time of filing return of income. Higher amount paid at the time of filing return of income is also noted by the concerned Assessing Officer and is one of the tool used for selecting the cases for scrutiny.
- News suggests that the income tax department is planning to select all such cases for scrutiny wherein the advance tax compliance is not done by the taxpayer. This is an initiative to make timely advance tax compliance from the taxpayer.