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"Pay as you earn" is the principle behind Advance Tax. Many individuals believe tax filing only happens once a year, but for those with significant non-salary income, the tax must be paid in quarterly installments.
Are you liable for Advance Tax?
If your estimated net tax liability for a financial year, after deducting TDS, is ₹10,000 or more, you are mandatory required to pay advance tax.
- Self-employed professionals and business owners.
- Individuals with high capital gains from stocks or property.
- Investors with significant dividend or rental income.
- Salaried individuals with high "other income" that isn't declared to their employer.
Installments and Due Dates
- 15th June: Pay 15% of estimated tax.
- 15th September: Pay 45% (cumulative) of estimated tax.
- 15th December: Pay 75% (cumulative) of estimated tax.
- 15th March: Pay 100% of estimated tax.
Caution: Skipping advance tax installments leads to interest charges of 1% per month under Sections 234B and 234C. It's cheaper to pay on time!
Calculating the exact estimated income for the whole year can be tricky for business owners. Paras Finance provides quick Advance Tax projections and quarterly filing support to help you avoid interest penalties.