Every Indian citizen is responsible for paying income tax and filing tax returns. It’s a healthy habit to keep, and it also helps in the recovery of TDS payments. Your taxes provide the government with a significant source of cash, which it invests in critical public programs and services.
Advance tax means Income tax should be paid in advance rather than in one lump sum at the end of the year. During the relevant Finance Year, the taxpayer must pay 15% of advance tax by 15th June, 45 percent of advance tax by 15th September, 75 percent of advance tax by 15th December, and 100 percent of advance tax by 15th March in four instalments.
When your tax liability in a financial year exceeds Rs. 10,000, you must pay advance tax. You can pay your taxes on time if you prepare beforehand. However, under section 234B of the Income Tax Act, you would be fined in the form of interest if you miss or delay the payment. Similarly, you must pay fines under sections 234A and 234C. Here’s a rundown of the three sorts of interest you might have to pay in case of default.
Section 234 A – Interest is charged for failure to furnish return of income.
Interest is charged at 1% per month or fraction of a month. For example, if the due date for filing a return of income is July 31, 2021, and the report of income is filed on January 9, 2022, it will be subject to interest under section 234A.
Section 234 B – In the case that a taxpayer fails to pay advance tax.
Interest under this section is levied under two cases:
- When a taxpayer fails to pay the advance tax despite the fact that he has to do so. Or
- When the taxpayer’s advance tax payment is less than 90% of the assessed tax.
Section 234 C – Interest on advance tax deferment.
Section 234C mandates the application of interest for failure to pay advance tax instalment(s), i.e., in the event of taxpayers (other than those who choose the presumptive taxation plan under sections 44AD or 44ADA), interest shall be imposed.
- Advance tax paid by the 15th of June is less than 12% of the assessed tax.
- Advance tax paid by the 15th of September is less than 36% of the assessed tax.
- Advance tax paid by the 15th of December is less than 75% of the assessed tax.
- The Advance Tax paid on or before March 15th is less than 100% of the Assessed Tax.
Section 234C imposes interest at 1% per month for three months if the first, second, and third instalments are not paid on time, and for one month if the last instalment is not paid on time.
This us clear alright. I calculate my Advance tax on the salary of the existing employment. When I get an employment in the third or 4th Quarter which pays double of what I am getting now, the advance tax calculation which I alraedy did goes for a six. Am I liable for interest?