What is Advance Tax?
Advance tax is a system where taxpayers pay a portion of their income tax liability in instalments throughout the financial year, rather than paying it all at once. This is mandated by Section 208 of the Income Tax Act, 1961. It applies to individuals and corporates with an estimated annual tax liability exceeding ₹10,000. Senior citizens without business income are exempt from this requirement.
Third Instalment Deadline
The deadline for the third instalment of advance tax is December 15, 2024. However, since this date falls on a Sunday, taxpayers can make their payments on the next working day, December 16, 2024, without incurring penalties. The Income Tax Department confirms that if banks are closed on the due date, payments can be made on the following working day.
Who Should Pay Advance Tax?
All taxpayers, including individuals and corporates with annual tax liabilities over ₹10,000, must pay advance tax in instalments. The payments ensure compliance and help avoid penalties for late payments. Senior citizens without business income are exempted.
How to Pay Advance Tax
Calculate Tax Liability: Estimate the total income and tax liability for the year, considering deductions and exemptions.
Use Online or Offline Modes: Payments can be made through the Income Tax Department’s online portal or via designated bank branches.
Select the Right Form: Use Challan 280 for advance tax payment.
Verify Payment: Once paid, download the receipt for reference and ensure the payment reflects in the income tax records.
Avoiding Penalties
Timely payment of advance tax instalments helps avoid interest penalties under Sections 234B and 234C of the Income Tax Act. Taxpayers are encouraged to plan and pay their instalments promptly.
