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Latest Advance Tax Payment Rules Under the Income Tax Act, 1961: A Comprehensive Overview

The Income Tax Act, 1961, governs the rules for Advance Tax payment in the financial year when the corresponding income is earned, in contrast to the assessment year when the income is assessed for tax. Dr. Suresh Surana, Founder of RSM India, provides valuable insights into the Advance Tax rules for 2023-24.

Understanding Advance Tax: Advance Tax is a payment made by taxpayers during the financial year in which they earn income from various sources, such as salary, rent, and interest, among others. This tax is calculated based on the projected consolidated income for the financial year, considering applicable deductions, exemptions, TDS/TCS credits, and more.

Criteria for Advance Tax Payment: As per Section 208 of the Income Tax Act, individuals with an estimated tax liability of Rs. 10,000 or more for the year are required to pay Advance Tax. However, resident senior citizens aged 60 years or older, with no income from business or profession, are exempt from this requirement.

Quarterly Instalments: In general, taxpayers are expected to make Advance Tax payments in specified quarterly instalments, adhering to specified due dates. Failure to meet these deadlines may result in interest penalties.

Exception for Specified Professionals: Certain professionals, including doctors, lawyers, and architects who have opted for the presumptive scheme under Section 44AD or 44ADA of the Income Tax Act, have a distinct rule. They must pay their entire Advance Tax liability in a single instalment by the 15th of March in the relevant financial year, instead of following the quarterly instalment schedule.

These rules and exemptions under the Income Tax Act aim to streamline the process of Advance Tax payment, ensuring that taxpayers fulfill their tax obligations promptly and efficiently.


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