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Computation of Advance Tax for Individuals:

(Section 209 of the Income Tax Act contains provisions for computation of Advance Tax in different cases)

Advance Tax is payment of income tax for the current year's expected income in advance. In case of salaried people, the formalities relating to advance tax payment on salary income are taken care of by their employer but for individuals having income other than salary, they themselves have to take care of advance tax payments on or before due dates.

Common question asked here is how to calculate the amount of advance tax when income is not yet received. Procedure to calculate Advance tax for an year is:
  1. Calculate total tax on the expected income of the current year on the basis of applicable tax rates for the year. 
  1. TDS deductible on the expected incomes shall be deducted from the tax so calculated. TDS deductible on incomes will be TDS on salary, TDS on FD interest or TDS on any other income.
  1. The amount so determined is the advance tax liability for the current year which needs to be paid in three instalments. From 1st June 2016 (Financial Year 2016-17) advance tax needs to be paid in four installments
  1. After making payment of first/second instalment of advance tax. remaining instalments can be and should be revised on the basis of revised estimate of current income. 
There is no liability for advance tax if total income tax liability of a person is less then Rs. 10000. In other cases individual assessees are required to pay advance tax for each year in three instalments.

Some Other Points:
  • Senior Citizens (except those having income from business and profession) are not required to pay advance tax.
  • Salaried people can avoid default/delay in payment of advance tax by declaring their other incomes like interest income to their employer. Employer will deduct due taxes as TDS.

Quick Links:
How to make online payment of advance tax?
Due Dates for Advance Tax payment
Interest u/s 234B for default in payment of advance tax
How to pay tax against demand notice?
Payment of Self Assessment Tax online

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