When a person becomes liable to pay Advance Tax
- Every person is liable to pay advance tax if advance tax payable is Rs 10,000 or more. Tax on net income (plus surcharge) after deducting TDS (deducted/deductible) if exceeds Rs 10,000, assessee is liable to pay advance tax.
- A senior citizen not having any income from business/profession is not liable to pay advance tax.
When advance tax payment becomes due
| Due Date of payment of advance tax | For any assessee
( except column 3) |
An assessee who declares his business/professional income In presumptive sections 44 AD(1) and 44 ADA (1) |
| On or before June 15 of the previous year | Up to 15% of advance tax payable | |
| On or before Sept 15 of the Previous year | Up to 45% of advance tax | – |
| On or before December 15 of the Previous Year | Up to 75% of advance tax | |
| On or before Mar 15 of the previous year | Up to 100% of advance tax | Up to 100% of advance tax payable |
Consequence of Non-payment of Advance Tax
For default in payment of advance tax (234B)-
- Interest under section 234B is applicable when:
- Your tax liability after reducing TDS for the financial year is more than Rs 10,000 and you did not pay any advance tax.
- OR
- You paid advance tax, but advance tax paid is less than 90% of ‘assessed tax’.
- In any one of the above cases, interest under section 234B shall be applicable.
- 234C – Interest under this section is based on individual cut off dates. ( e.g. June 15, Sept 15, etc). It is calculated from the individual cut-off date till the date of actual payment of outstanding taxes.
| Scenario | Rate of Interest | Period of Interest | Amount on which Interest is calculated |
| If Advance Tax paid on or before June 15 is less than 15% of the Amount* | Simple interest @1% per month | 3 months | 15% of Amount* (-)tax already deposited before June 15 |
| If Advance Tax paid on or before September 15 is less than 45% of the Amount* | Simple interest @1% per month | 3 months | 45% of Amount* (-) tax already deposited before September 15 |
| If Advance Tax paid on or before December 15 is less than 75% of the Amount* | Simple interest @1% per month | 3 months | 75% of Amount* (-) tax already deposited before December 15 |
| If Advance Tax paid on or before March 15 is less than 100% of the Amount* | Simple interest @1% per month | ————– | 100% of Amount* (-) tax already deposited before March 15 |
Examples
- Consider that your total tax liability for this financial year is Rs. 100,000 and it needs to be paid in installments as explained above. Assume there is no TDS here.
- If you made partial payments instead, you will be liable to pay interest as per the last column in the table below: Total interest Payable is Rs 2600
| Payment Dates | Advance Tax payable | Total Advance Tax paid ( Cumulative) | Shortfall (Cumulative) | Penalties (Cumulative) |
| 15th June | 15,000 | 5,000 | 10,000 | @1% * 3*10,000 = 300 |
| 15th September | 45,000 | 25,000 | 20,000 | @1% * 3 *20,000 =600 |
| 15th December | 75,000 | 35,000 | 40,000 | @1% * 3 *40,000 =1200 |
| 15th March | 1,00,000 | 50,000 | 50,000 | @1% * 1 *50,000 =500 |