Advance Payment Of Tax

Advance Payment of tax is another method of collection of tax by the Central Government in the
Form of Prepaid Taxes. Such advance tax is in addition to deduction of tax at source or
collection of tax at source. Scheme of advance payment of tax is also known as pay as you
earn scheme i.e., the assessee is required to pay tax during the course of earning of income in the
previous year itself, though such income in chargeable to tax during the assessment year.
Advance tax is payable on current income in installments during the previous year. If the income
tax liability of any assessee is more than Rs.10,000.00 in any financial year, then he is liable to
pay such tax in installments during the year itself rather than paying this tax at the end of the
year.

Payment of advance tax

Advance tax is liable to be paid as per the following schedule :

Assessee other than Companies

Due Date
On or before 15th
September

Amount Payable
Not less than 30% of the advance tax liability

On or before 15th
December

Not less than 60% of the advance tax liability as reduced by the amount if any, paid
in earlier installment

On or before 15th
March

100% of the advance tax liability as reduced by the amount if any, paid in earlier
installment

In case of Companies
Due Date
Amount Payable
On or before 15th Not less than 15% of the advance tax liability
June
On or before 15th Not less than 45% of the advance tax liability as reduced by the amount if any,
September
paid in earlier installment
On or before 15th Not less than 75% of the advance tax liability as reduced by the amount if any,
December
paid in earlier installment
On or before 15th 100% of the advance tax liability as reduced by the amount if any, paid in earlier
March
installment

Computation of advance tax

Advance tax is liable to be paid by estimating the current year income and then applying the tax
rates as per the Income Tax Slabs in force. The Advance tax shall be computed as under :
Add/Less Particular
Less:
Less:

Add:
Less:
Add:
Add:
Less:
Less:
Less:

Income under 5 heads

Brought Forward losses and allowance
Gross total Income
Chapter VI-A Deduction
Estimated Total Income
Tax on Estimated total income
Surcharge (if any)
Total tax Payable
Relief U/S 89
Tax Liability
2% Education Cess
1% SAHEC
Total tax Liability
Relief u/s 90, 90A, 91
MAT Credit u/s 115JA
TDS as shown in form 16/16A and reflected in
form 26AS
Advance Tax Liability

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Interest on late
payment of
advance tax
If the income tax is
not payable as per
the above
schedule, interest
is liable to be paid
late payment of
advance tax as
follows :
1. Interest
under
section
234C Interest @
1% p.m. is
payable if
the tax is

not paid as per the above schedule, i.e. for Deferment of advance tax.
2. Interest under section 234B - Interest @ 1% p.m. is payable if 90% of the tax is not paid
before the end of the financial year, i.e. default in payment of advance tax.

In Case of Excess Advance Tax Paid

In case the Advance Tax paid is a higher amount than the actual tax liability, then the excess
amount is refunded back to the assessee. Also an interest of 6% on the excess amount is paid, if,
the excess amount is 10% more than the actual tax.

Where to Pay Advance Tax

Advance Tax could be paid using a Tax Payment Challan at designated branches of banks
empanelled with the Income Tax Department. Branches of ICICI, HDFC and SBI accept
Advance Tax Payment Challans. Alternatively, individuals could pay Advance Tax online
through the Income Tax Dept / NSDL website.
https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp and use CHALLAN NO. /ITNS 280