The advance tax payment deadline is 15 March. Here is a quick guide on it.
What is it
You need to pay this tax in advance or before the fiscal year ends on 31 March. It is payable on your current income less the tax deductible or collectible at source (TDS) on any other income. Simply put, you need to pay advance tax on any income on which you don’t pay TDS.
Who needs to pay
All individuals, salaried or otherwise, with an advance tax liability of at least Rs 10,000 in a single fiscal year need to pay advance tax. In fact, you need to pay it within the fiscal year in which you’ve earned the income. So, if your advance tax liability for FY11 has exceeded Rs 10,000, you are expected to pay it in FY11 itself.
If you generate your income only from salary, you don’t need to worry about advance tax since your employer would take care of advance tax payments through TDS. But if you have income from other sources, including house property, capital gains from shares, mutual funds, business income and interest income from fixed deposits and the like, you will need to pay advance tax.
When to pay
It can be paid in three instalments and in a certain percentage for individuals. First, you can pay not less than 30% of advance tax on or before 15 September. Second, not less than 60%, including earlier instalments, on or before 15 December. Third, the entire amount as reduced by the amounts paid earlier on or before 15 March.
If you miss the deadline
If you fail to pay or the amount you’ve paid is less than the mandated 30% of the total liability by the first deadline, 15 September, you will need to pay an interest. This is calculated at 1% simple interest per month on the defaulted amount for three months. The same interest penalty would apply if you miss the second deadline, 15 December. Missing the third and last deadline of 15 March would mean paying 1% simple interest on the defaulted amount for every month until the tax is fully paid. So, you better not delay now since the last deadline is less than a week away.
If you earn an income after 15 March and pay the advance tax before 31 March, you don’t need to pay any penal interest. But if you miss the 31 March deadline for such income, then you will have to shell out penal interest under the applicable section of the Income-tax Act. If you happen to pay a higher amount than your advance tax liability, you get a refund. You also get a interest of 6% on the excess amount if it is 10% higher than the total tax paid.