Guess what’s just around the corner? 
The Advance Tax due date!
Yep, you read that right – mark December 15th, 2023 on your calendars, because it’s the day when your responsibility to pay the 3rd installment of advance tax comes knocking for FY 2023-24.
So, what is advance tax?
Simply stated, pay your tax liability before the end of the financial year.
This means, unlike the usual case, where tax is paid after the income has been earned, as per section 208 of the IT Act, taxes should be paid in advance for the income earned in a particular financial year if the estimated tax liability exceeds ₹10,000.
Advance tax is beneficial for taxpayers as well as they do not have to worry about running out of money or making last-minute tax payments when they pay their taxes in advance.
Advance tax payment due dates & amount
Advance tax is payable in installments on or before the due dates and will be paid in the same year the income is generated. For FY 2023-24 it is as follows:
| Installment | Due date of installment | Amount Payable |
|---|---|---|
| 1 | 15th June | Atleast 15% of the tax liability |
| 2 | 15th September | Atleast 45% of the tax liability |
| 3 | 15th December | Atleast 75% of the tax liability |
| 4 | 15th March | Atleast 100% of the tax liability |
How is advance tax calculated?
- Estimate all the earnings in a given year
- Subtract the amount of deductions eligible
- Compute the tax liability as per the latest slab rates and the regime opted for.
- If the tax liability exceeds ₹10,000, then adhere to the advance tax provisions.
- Account for the taxes already paid and make the advance tax payment for the remaining tax liability.
Here’s an example on How to calculate advance tax?
For your ease in calculating advance tax, use this Advance Tax Calculator
Key Considerations:
- Individuals with salary income covered under TDS net are not liable to pay advance tax. However, any earnings from sources such as capital gains, rent, interest, or non-salary income are subject to advance tax.
- Resident senior citizens aged 60 or above not having income under the “Income from Business & Profession” head are exempted from paying advance tax.
- NRIs, whose tax liability in India exceeds Rs.10,000 are also liable for advance tax payment.
- If presumptive taxation is opted for, the advance tax can be paid in one installment on or before 15 March of the relevant year.
What are the consequences of late payment of Advance Tax?
Any late payment of advance tax attracts a 1% interest penalty per month or part thereof under section 234B and/or 234C of the IT Act.
Read more about Advance Tax under the Income Tax Act.
Have questions? Shoot’em here.