Computation of Advance Tax for Individuals:
(Section 209 of the Income Tax Act contains provisions for computation of Advance Tax in different cases)
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,
themselves have to take care of advance tax payments on or before due
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:
- Calculate total tax on the expected income of the current year on the basis of applicable tax rates for the year.
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.
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
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.
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.
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