What is the story about?
With just 7 days left for the December 15 advance tax deadline, taxpayers must ensure timely payment of their instalments. Advance tax is required under the Income Tax Act, 1961, for anyone whose estimated total tax liability exceeds ₹10,000, after accounting for tax deducted or collected at source (TDS).
How advance tax works?
Advance tax is paid in four instalments during the financial year:
The December 15 instalment is a key checkpoint, as taxpayers must have paid at least 75% of their estimated liability by this date.
Missing the deadline can attract interest at 1% per month on the shortfall, under Section 234C of the Income Tax Act.
Who should pay advance tax?
According to Avnish Arora, Executive Director, Direct Tax, Forvis Mazars India, “Advance tax is payable by any person, salaried or non-salaried, whose estimated total tax liability for the year is ₹10,000 or more after adjusting for TDS. Salaried individuals often meet their liability through monthly TDS, but advance tax becomes necessary where TDS is insufficient. Resident senior citizens above 60 years, with no income from business or profession, are exempt.”
The deadline is particularly important for freelancers, investors, and small business owners, as their incomes are generally not subject to regular TDS.
Advance tax applies to all types of income, and any remaining tax after adjusting for TDS and previous instalments must be paid as self-assessment tax while filing returns.
Taxpayers should calculate their estimated tax liability and pay the December instalment on time to avoid interest penalties and a heavy lump-sum payment at year-end.
How advance tax works?
Advance tax is paid in four instalments during the financial year:
- June 15: 15% of total tax liability
- September 14: 45% (less advance tax already paid)
- December 15: 75% (less advance tax already paid)
- March 15: 100% (less advance tax already paid)
The December 15 instalment is a key checkpoint, as taxpayers must have paid at least 75% of their estimated liability by this date.
Missing the deadline can attract interest at 1% per month on the shortfall, under Section 234C of the Income Tax Act.
Who should pay advance tax?
According to Avnish Arora, Executive Director, Direct Tax, Forvis Mazars India, “Advance tax is payable by any person, salaried or non-salaried, whose estimated total tax liability for the year is ₹10,000 or more after adjusting for TDS. Salaried individuals often meet their liability through monthly TDS, but advance tax becomes necessary where TDS is insufficient. Resident senior citizens above 60 years, with no income from business or profession, are exempt.”
The deadline is particularly important for freelancers, investors, and small business owners, as their incomes are generally not subject to regular TDS.
Advance tax applies to all types of income, and any remaining tax after adjusting for TDS and previous instalments must be paid as self-assessment tax while filing returns.
Taxpayers should calculate their estimated tax liability and pay the December instalment on time to avoid interest penalties and a heavy lump-sum payment at year-end.
