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Compliance with Advance Tax Payment
Compliance with Advance Tax Payment
Advance tax refers to the income tax that is payable by individuals or businesses in installments, rather than a lump sum at the end of the financial year. The relevant sections of the Income Tax Act, 1961 governing advance tax in India are:
1. Section 208 – Liability for Advance Tax
1. Section 208 – Liability for Advance Tax
It mandates that if the total tax liability of an individual, business, or company exceeds ₹10,000 in a financial year (after deducting TDS/TCS), then they must pay advance tax.
2. Section 209 – Computation of Advance Tax
2. Section 209 – Computation of Advance Tax
This section explains how to calculate advance tax based on the taxpayer's estimated current income.
Deductions like TDS, rebates, and reliefs are considered while calculating the liability.
For taxpayers opting for the Presumptive Taxation Scheme (Section 44AD or 44ADA), the entire advance tax is payable in one installment by 15th March.
5. Section 234B – Interest for Default in Payment of Advance Tax
5. Section 234B – Interest for Default in Payment of Advance Tax
If a taxpayer fails to pay advance tax or pays less than 90% of the total tax liability, interest at 1% per month is charged.
6. Section 234C – Interest for Deferment of Advance Tax
6. Section 234C – Interest for Deferment of Advance Tax
Interest at 1% per month is levied if installments are not paid on time or are less than the prescribed percentage.
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