Advance tax

Advance tax means payment of tax in advance. If the tax is payable in case of specified individuals then it has to be paid in parts in advance. This advance payment of tax is known as advance tax.

Specified individuals liable to pay advance tax:
Any tax payer whose specified tax liability exceeds Rs.10,000 in a financial year is required to pay advance tax.
Senior citizens not having any business income are exempted from the payment of advance tax.

PAYMENT OF ADVANCE TAX:
In case of companies:
1. On or before 15th June : 15% of the advance tax liability has to be paid.
2. On or before 15th Sept:  Not less than 45% as reduced by any amount paid earlier.
3. On or before 15th Dec.: Not less than 75% as reduced by any amount paid earlier.
4. On or before 15th March: 100% as reduced by any amount paid earlier.

In case of Assesses other than companies:
1. On or before 15th Sept. : Not less than 30% of the advance tax liability.
2. On or before 15th Dec.: Not less than 60% as reduced by any amount paid earlier.
3. On or before 15th March: 100% as reduced by any amount paid earlier.

PENALTIES UNDER INCOME TAX ACT,1961:
Penalty in case of advance tax:
1. Under section 234B :Interest @ 1% is payable if 90% of tax is not paid before the end of the year.
2. Under section 234C: Interest @ 1% p.m. is payable if tax is not paid as per above schedule.