What is Advance Tax? Why December 15 deadline is important for these taxpayers?

If you also have to deposit advance tax, then December 15 is very important for you. The second installment of advance tax for the third quarter of the financial year 2024 has to be deposited by December 15. If you fail to pay advance tax, you will have to pay penalty.

According to Section 208 of the Income Tax Act, advance tax has to be paid by those people whose tax liability is more than Rs 10,000. Photo: Unsplash/Representational

If you have to pay advance tax, then December 15 is an important date for you. The second installment of advance tax for the third quarter of the financial year 2024 has to be deposited by December 15. If you fail to pay advance tax, you will have to pay penalty. Not only this, you will also have to pay interest for delay. Know what is advance tax and when in a year you have to pay it.

What is advance tax?

Advance tax is a type of income tax, which has to be deposited with the Income Tax Department before the end of the financial year.

It is not paid in lump sum on annual basis like normal tax, but is deposited in installments.

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Under this, taxpayers deposit taxes in advance with the Income Tax Department.

Who has to pay advance tax?

According to Section 208 of the Income Tax Act, advance tax has to be paid by those people whose tax liability is more than Rs 10,000.

This applies to employed people, freelancers, businessmen and people who earn money in some other way.

However, if your age is more than 60 years, those who do not do any kind of business are exempted from advance tax.

When is advance tax paid?

Advance tax does not have to be paid in lump sum once a year like normal tax, but has to be paid in installments.

It has to be paid every quarter.

Its date is decided by the Income Tax Department.

For the Financial Years 2022-23 and 2023-24, these dates are June 15, September 15, December 15 and March 15.

How much advance tax you need to pay?

Even though advance tax is paid in installments, it is calculated for the entire year.

You will have to calculate in advance how much tax you may have to pay in a year.

After removing deductions from your income, you can calculate tax on the remaining income as per your tax slab.

After this, you will have to pay at least 15 per cent of your advance tax on June 15.

Whereas 45 per cent of advance tax has to be paid by September 15, 75 per cent of advance tax by December 15 and 100 per cent of advance tax has to be paid by March 15.

What will happen if advance tax is not paid?

In case of employed people, in case of change of job, TDS is often not deducted properly by the companies and advance tax liability is created.

In such a situation, you will have to check and deposit advance tax, otherwise a charge will be levied on you and you will also have to pay interest.

If there is default in payment of advance tax, penalty is imposed under section 234B and 234C.

Penalty interest of 1 per cent is charged every month on each section.

Section 234B is imposed for delay in payment of advance tax or shortfall in tax payment.

Whereas Section 234C applies to non-payment or short payment of individual advance tax installments.

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