The income tax department has reminded the taxpayers to pay their first installment of the advance tax. The taxpayers can pay 15% of the estimated tax liability by 15 June 2023. “Kind Attention Taxpayers! Do remember to pay your first instalment of Advance Tax by the 15th of June, 2023,” read a tweet from the tax department.
What is advance tax?
Advance tax is the amount of income tax that should be paid in installments as per the due dates rather than in one lump sum.
Individuals and businesses pay income tax in advance through instalments rather than a lump sum at the end of the year. “It applies to all taxpayers, including salaried individuals, freelancers, and businesses, who have a total tax liability of ₹10,000 or more in a financial year,” said Amit Gupta, MD, SAG Infotech.
However, senior citizens aged 60 years or above who do not have business income are exempt from paying advance tax.
“For those under the presumptive taxation scheme (sections 44AD and 44ADA), the entire advance tax amount must be paid in one instalment on or before March 15th, or by March 31st at the latest,” added Gupta.
What happens if taxpayers fail to pay advance tax?
Amit Gupta said failure to pay advance tax or late payment will result in interest charges under sections 234B and 234C of the Income Tax Act, 1961. Timely payments are essential to avoid penalties.
Overall, advance tax payments ensure a steady flow of income for the government and ease the burden of paying taxes in a lump sum for individuals and businesses. It is crucial to accurately estimate income and make timely payments to avoid interest and penalties.