Advance Tax Due Date lurking, time to pay up! ⏳

Guess what’s just around the corner? :hourglass_flowing_sand:The Advance Tax due date!

:bulb: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?

  1. Estimate all the earnings in a given year
  2. Subtract the amount of deductions eligible
  3. Compute the tax liability as per the latest slab rates and the regime opted for.
  4. If the tax liability exceeds ₹10,000, then adhere to the advance tax provisions.
  5. 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?

:point_right: 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.

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Hi I have paid advance tax in September 2022 for financial year 2022-23 i.e assessment year 2023-24 but my tax paid amount is not reflecting on form 26AS. What should I do.

Hi @Harsh_Vaidsain,

There can be a discrepancy in the income tax website.
You could verify with your AIS (Annual Information Statement) once if the amount is reflected over there or not.

Hope it helps.

when do we have to pay interest penalty for shortfall of advance tax u/s 234C ?

at the time of next advance tax payment ? or when we are filing ITR ?

Hi @Private

Interest penalty u/s 234C is for deferment in payment of tax during the financial year.
So it can be applicable at the time of the next advance tax payment if the earlier installment is not paid, and if the last installment is not paid, it shall be applicable at the time of filing ITR.

Hope this helps.

Hi Team,

How to calculate advance tax in cases of F&O trading. My profit can vary throughout the year. Should I just pay tax on what I earned this quarter or any other method? (P.S. My salary income is more than 10 lakhs)

Also if I have carried forward losses from last year, do I take that into account while paying Advance tax?

Hi @NavalKabra9

That is a very common question a lot of traders have. In such a case, you can calculate the tax liability based on the earnings until the advance tax installment, and usually by the time the last installment of advance tax is due on 15th March, traders have a better idea of the earnings. If there are excess dues, they can be paid when filing the ITR. On the other hand, if you have paid more in advance tax than your income tax liability, you can claim the refund for the same when filing your ITR. The tax credits for the advance tax paid will be reflected in your Form 26AS .

FnO is a non-speculative business income taxed at slab rates. Advance tax is payable if your estimated total income from all the sources exceeds ₹10,000 in a financial year.
Advance tax is payable in quarterly installments if presumptive taxation is not opted for, and in one installment till 15 March of the financial year if presumptive taxation is opted for.
Steps to calculate advance tax:
Step 1: Estimate your yearly total income
Step 2: Calculate your total tax liability for the year
Step 3: Make a payment of advance tax as per the taxation scheme opted for.

Yes, you can consider previous years’ losses while calculating advance tax.
Here’s how you can Calculation of Advance Tax : Help Center.

Hope this helps.

is it okay if we don’t pay first 3 installment of advance tax and pay all the advance tax by 15th march with penalties ?

is there any prosecution for non payment of first 3 advance tax installment?

Hi @Private

If you don’t pay the first 3 installments of advance tax on or before the due date, you will have to pay interest at 1% per month as an interest penalty.

Hence, in order to avoid paying unnecessary extra tax, it is better to pay it on time.

In case you’re opting for the presumptive scheme, you can pay the advance tax in one installment till 15th March, without any interest penalty.

I want to know whether adavance tax is required to be paid on sale of house property by a senior citizen who is a resident individual and not having business income. If advance tax is not payable, is it sufficient if capital gains tax is paid on 31st July ?

Hi @Narayanan_Nagarajan No advance tax is to be paid by Senior citizen on Capital Gains if there is no income from Business & Profession during the financial year.

Thus, you can pay tax on Capital Gains at the time of filing ITR on or before the due date i.e July 31, 2024 for AY 2024-25.

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