Arjuna (Fictional Character): Krishna, the due date for paying Second installment of Advance Tax for F.Y. 2022-23 is 15/09/2022. So, explain the basic concept of the Advance tax.
Krishna (Fictional Character): Arjuna, If the income tax liability of any taxpayer is more than Rs 10,000 in a financial year, then he is liable to pay such tax in installments during the year itself as “Advance Tax”. Advance tax is to be paid in the four installments – 15% on or before June 15, 45% on or before September 15, 75% on or before December 15 and 100% on or before March 15 of the previous year.
A taxpayer who has opted for the scheme of computing business income under section 44AD and 44ADA on presumptive basis, is liable to pay only the last installment for the advance tax. Senior citizens, who are 60 years or older, not having income from business or profession, are exempt from paying advance tax.
Taxpayers should estimate income of the financial year and income tax thereon. From that Income Tax, TDS, TCS credit will have to be deducted and installment of advance tax should be paid.
Arjuna (Fictional Character): Krishna, is there any information available on the new portal for payment of Advance tax?
Krishna (Fictional Character): Arjuna, in income tax, decisions of upcoming or current year are taken based on Profit and Loss of the previous years. After logging in to the new portal, the details of taxable income and tax liability are available for two previous financial years on the dashboard. Further, details of advance tax, TDS/ TCS and self-assessment tax paid for two previous financial years is also available. The taxpayer can consider the same for calculation of his advance tax liability for current year.
Arjuna (Fictional Character): Krishna, what will happen if advance tax is not paid?
Krishna (Fictional Character): Arjun, if advance tax is not paid then interest will have to be paid @1% per month u/s 234B and 234C and one may face enquiry from the department. Further penalty may be imposed on the taxpayers who are required to pay high amount of advance tax. Due to computerization income tax department gets lot of information, based on which department sends advance tax notices asking for payment of taxes.
Arjuna (Fictional Character): Krishna, what one should learn from this?
Krishna (Fictional Character): Arjuna, as we look back in our life to take Important Decisions in future, similarly we should find how much tax we have paid in the past and by estimating growth in Income we should pay Advance Tax accordingly. One should pay the tax as per provisions of the Act. Otherwise taxpayers will have to face consequences in the future. Precaution is always better than cure!
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