As an individual, if you have missed paying your second instalment of advance taxes by December 15, you need not worry. The income tax laws provide you an option to pay advance taxes by March 15 with interest.
For some of us, a basic question that arises is what exactly is advance tax. Advance tax is a part payment of one’s own tax liability before the end of the financial year. The provisions of the Income-Tax Act, 1961 create an obligation on individuals, professionals, corporates and businessmen to pay advance tax if there is income from interest, commission, rent, business, etc, on which no tax has been deducted at source (or deducted at a lower rate) and the balance tax liability on the estimated income is R10,000 or more.
For example: Sharma has income from salary, interest from bank deposits and rent from a property. His employer deducts taxes on his salary income, but no taxes are deducted on other incomes. Taking this into consideration, Sharma anticipates that his tax liability on other incomes is likely to be R24,000. This liability of R24,000 has to be discharged as advance tax.
An individual is required to pay advance tax in three instalments as per Section 234C of the Act. So, if you have just realised that you have missed the December 15 timeline of the second instalment, you still have a chance. As per the provisions of the Act, you can discharge your balance advance tax liability by March 15 with interest of 1% per month. The interest will be calculated for six months if due taxes were not paid by September 15 and three months if taxes were not paid by December 15.
Now, if Sharma has paid R7,200 (30% of the advance tax liability of R24,000 by September 15) and missed paying the second instalment of R7,200 by December 15, he can deposit this amount with the third instalment by March 15. He will be liable to pay interest of 1% per month on R7,200 for three months.
For payment of advance tax, one needs to take the following steps: Fill up Challan No. ITNS 280. Deposit it, along with the amount, in a bank accepting tax payments. You can also pay tax online.
So, it is a good idea to take out some time to analyse if you have any advance tax liability and do the needful.
For some of us, a basic question that arises is what exactly is advance tax. Advance tax is a part payment of one’s own tax liability before the end of the financial year. The provisions of the Income-Tax Act, 1961 create an obligation on individuals, professionals, corporates and businessmen to pay advance tax if there is income from interest, commission, rent, business, etc, on which no tax has been deducted at source (or deducted at a lower rate) and the balance tax liability on the estimated income is R10,000 or more.
For example: Sharma has income from salary, interest from bank deposits and rent from a property. His employer deducts taxes on his salary income, but no taxes are deducted on other incomes. Taking this into consideration, Sharma anticipates that his tax liability on other incomes is likely to be R24,000. This liability of R24,000 has to be discharged as advance tax.
An individual is required to pay advance tax in three instalments as per Section 234C of the Act. So, if you have just realised that you have missed the December 15 timeline of the second instalment, you still have a chance. As per the provisions of the Act, you can discharge your balance advance tax liability by March 15 with interest of 1% per month. The interest will be calculated for six months if due taxes were not paid by September 15 and three months if taxes were not paid by December 15.
Now, if Sharma has paid R7,200 (30% of the advance tax liability of R24,000 by September 15) and missed paying the second instalment of R7,200 by December 15, he can deposit this amount with the third instalment by March 15. He will be liable to pay interest of 1% per month on R7,200 for three months.
For payment of advance tax, one needs to take the following steps: Fill up Challan No. ITNS 280. Deposit it, along with the amount, in a bank accepting tax payments. You can also pay tax online.
So, it is a good idea to take out some time to analyse if you have any advance tax liability and do the needful.