Advance Tax Payment Due Dates FY 2023-24: Advance Tax is the pre-paid tax paid by the assessee on the income earned during the year. In simple terms, you can say that the assessee must pay taxes in advance on the estimated income for the year in installments. This applies to individual taxpayers, company, and corporate taxpayers.
For example, for the financial year 2023-24 (relevant to the assessment year 2024-25), advance tax is payable in instalments throughout 2023-24.
In this article, we will discuss the due dates for advance tax payments for the assessment year 2024-25.
Who is Liable to Pay Advance Tax?
The following persons are required to pay advance tax before the last date.
- Salaried Persons whose tax is calculated at more than Rs.10,000 are liable to pay advance tax.
- Businessmen whose tax is calculated as more than Rs.10,000 are liable to pay advance tax.
- Freelancers whose tax is calculated as more than Rs.10,000 are liable to pay advance tax.
Who is not Liable to Pay Advance Tax?
Senior Citizens whose age is 60 years or older and not running any business exempt from paying advance tax. In simpler words, if you meet these conditions:
- You are an individual.
- You live in India as per the Income-tax Act.
- You are 60 years old or older at any time during the year.
- You don’t earn income that falls under the category of “Profits and gains of business or profession.”
Then, you don’t have to worry about paying advance tax. This rule is meant to provide some relief to senior citizens who meet these criteria.
Advance Tax Payment Due Dates for (A.Y.2024-25 F.Y. 2023-24)
The advance tax has to be paid by the assessee on the following dates specified by the Income Tax act. The delay in the payment of advance tax attracts a penalty. The following table contains advance tax payment due dates for f.y. 2023-24. Check Interest on Short or Non Payment of Advance Tax
|Advance Tax||Installment||Due Dates|
|15% of Advance Tax||1st Installment||15th June 2023|
|45% of Advance Tax||2nd Installment||15th September 2023|
|75% of Advance Tax||3rd Installment||15th December 2023|
|100% of Advance Tax||4th Installment||15th March 2023|
|The taxpayers who have opted for the presumptive taxation scheme under sections 44AD & 44ADA Business income can pay 100% of advance tax on or before 15th March.|
Mr. Patel’s Situation and Advance Tax Liability (Example)
Mr. Patel’s Situation:
– Mr. Patel is the owner of a provision store.
– In the financial year 2023-24, his store had a turnover of Rs. 1,50,00,000.
– He wants to calculate his income for tax purposes using the provisions of section 44AD, which allows him to declare income at 8% of the turnover.
Advance Tax Liability:
– Mr. Patel meets the criteria of section 44AD for his provision store business, which means he can choose to calculate his income as 8% of the turnover.
– However, even if he chooses this section, he is still liable to pay advance tax.
In simple terms, Mr. Patel can use section 44AD to calculate his income based on a percentage of his store’s turnover. But, he must also pay advance tax for his income generated from the provision store business. This means he needs to make tax payments in advance throughout the year, even though he’s using the simplified calculation method provided by section 44AD.
Mr. Rajesh’s Tax Situation and Advance Tax Liability
Of course, let’s use a different name and turnover:
Mr. Rajesh’s Situation:
– Mr. Rajesh is 39 years old and runs a medical store.
– In the financial year 2023-24, his store had a turnover of Rs. 35,00,000.
– His accounts show a net profit of Rs. 2,30,000.
Advance Tax Liability:
– Whether Mr. Rajesh is liable to pay advance tax depends on his estimated tax liability for the financial year.
– His taxable income is Rs. 2,30,000.
– According to the normal tax rates for individuals below 60 years of age, he falls in the 5% tax bracket.
– However, there’s a rebate under section 87A that provides a benefit if his total income is below a certain threshold.
– Since Mr. Rajesh’s income is below Rs. 5,00,000, he qualifies for a rebate under section 87A.
– Therefore, his tax liability is reduced to zero, and he doesn’t have to pay any advance tax.
In simpler terms, Mr. Rajesh does not need to pay advance tax because his taxable income is below the threshold, and he qualifies for a rebate under section 87A. His income tax liability is effectively nil for the financial year 2023-24.
Advance Tax Payment Due Dates Important Points
You should consider the following points about advance tax payment dues for f.y. 2023-24.
- Business/Professional assessees declaring income under the estimated income scheme u/s44AD or 44ADA shall be required to deposit the whole of advance tax by 15th March of the financial year.
- Any amount deposited by 31st March is treated as advance tax for that financial year.
- In the case of salary income, the tax is deducted by the employer. So TDS is also treated as prepaid taxes. So salaried person pay advance tax but in the shape of TDS. So the Salaried person needs to pay tax if the tax is less than TDS. But if the TDS is less than the actual Tax then they are also liable to pay advance tax.
But TDS should be deposited latest by 31st March of the financial year.
If the due date is Sunday or any holiday then the assessee can deposit the advance tax on the next working day. It will be treated as advance tax and no penal interest will be charged.
Check our article: Who is required to pay advance tax?
The payment of advance tax dates is very important. The penal interest at the end of the financial year will be calculated by the delay from the due date of a particular instalment. So don’t miss the advance tax payment date. To do this bookmark this page and visit regularly or subscribe to your email to get a monthly reminder of all the due dates/closing dates of Income Tax and other taxes in India.
How to Calculate Advance Tax?
- Advance tax is payable in instalments as above on total income estimated for the financial year including capital gains and casual incomes such as winning from lotteries, races etc.
- The income for the current year should be estimated as precisely and correctly as possible. The mistake attracts penal interest.
- If any capital gains or casual income arises subsequent to payment of an instalment, the remaining instalment of advance tax should be revised. If any income arises after 15th March then advance tax can be deposited on such income up to 31st March.
1. Payment Options: Advance tax can be paid by the taxpayer in two ways:
- On His Own Account: The taxpayer can estimate their current income and pay advance tax voluntarily without any order from the Assessing Officer.
- Pursuant to an Order: Alternatively, the taxpayer may be required to pay advance tax as per an order issued by the Assessing Officer.
2. Estimating Current Income: Taxpayers who are liable to pay advance tax must estimate their current income and pay this tax based on their own estimation. When they pay on their own account, they don’t need to submit any income estimate or statement to tax authorities.
3. Revision of Advance Tax: If there are changes in the tax liability after paying the first, second, or third installment of advance tax, the taxpayer can adjust the remaining instalments based on revised income estimates. This allows them to pay the correct amount of tax as per their updated assessment.
4. Computation of Tax: Tax is calculated based on the taxpayer’s estimated current income, using the tax rates applicable for the financial year. This estimated tax amount is then subject to adjustments.
5. Deductions: From the computed tax amount, various deductions are made:
- Tax deducted or collected at source is deducted from the calculated tax amount.
- Any relief of tax allowed under section 90 or section 90A, deductions under section 91, or tax credits set off as per section 115JAA or section 115JD are also subtracted from the tax amount.
6. Remaining Tax Payable: After all these deductions, the balance tax payable is used to determine the advance tax liability, which is the amount the taxpayer needs to pay in instalments.
In summary, advance tax is a mechanism where taxpayers estimate their current income, calculate tax based on it, deduct various applicable deductions, and then pay the remaining tax liability in instalments throughout the financial year. This ensures a regular and timely payment of taxes to the government.
Advance Tax Payment – Latest Amendments
- Advance Tax Requirement (Section 208): If your estimated tax bill for the year is Rs. 10,000 or more, you must pay your taxes in advance, which is known as “advance tax.” This means you can’t wait until the end of the year to pay all your taxes; you need to pay some of it in advance by certain due dates.
- Exception for Senior Citizens (Section 207): However, there’s an exception for senior citizens who are 60 years old or above and don’t have income from a business or profession. They are not required to pay advance tax.