Advance Tax Payment- Due Dates, Rates, Challan and Penalty Interest
July 12 , 2013

Advance tax is an unfamiliar concept for majority of salaried individuals since it does not involve them directly though they may be liable to pay it. In tax parlance you call the year of earning income as previous year and the following year of paying tax and filing returns on those incomes as assessment year. Advance tax is called so because it is paid in the same previous year.

Who should pay advance tax?

Everyone whose amount of tax payable is Rs 5,000 or more is supposed to pay the tax in advance. If it is smaller than that the government would not mind waiting until the assessment year. Advance tax scheme is therefore also called as pay as you earn scheme.

Advance tax payment through challan or online

If you are liable to pay advance tax, it can be deposited through a bank using challan ITNS 280 or online though NSDL TIN website. Challan ITNS 280 is common for advance tax, self assessment tax and certain other types so select the appropriate option (100). Cash payment and cheque are accepted. For step by step guidance you may refer to procedure How to  Pay Advance Tax.

Advance tax due dates and rates

Advance tax is paid in three installments and by the third installment your entire tax liability for the year is required to be cleared. The dates and amount of tax payment is prescribed by the government as in the table:


Minimum payable

15 September

30% of tax

15 December

60% of tax

15 March

100% of tax

Rate of advance tax payment is the same as tax slab of the person concerned. Since it is possible that your estimation of tax payable may turn to be different from your actual tax liability which can be known only at the end of the financial year, any extra income tax to be paid you can pay it as self assessment tax in the assessment year. Conversely if you paid extra tax as advance tax then you can claim refund while filing tax returns in the assessment year. You need to quote bank's acknowledgement details of getting refund of advance tax payment.

Interest penalty on late payment of advance tax

If you fail to pay advance tax as per the 3 schedules in the table above then simple interest at the rate of 1% for every month of default is supposed to be paid.

To conclude

If salary is your only source of income then you can relax since TDS would take care of your tax liability. But if you have other income sources like professional income, capital gains, interest and tax on these is more than Rs 5,000 then you are liable pay advance tax.  If you are liable, pay up your advance tax on time by the due dates and escape interest for late payment.

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