Advance Tax Payment

Advance Tax Payment

Advance Tax Payment refers to the tax paid by the taxpayer to the income tax department during the current year without waiting for the end of the year. This is to ensure that the government can collect taxes more evenly throughout the year. Although the government collects advance tax through the implementation of the mandatory TDS, in some cases a person’s income, although taxable, does not collect the full TDS and therefore that person can claim an income tax return. Conversely, in some cases, the TDS in advance may be less than the total tax liability for the year. In all of these cases, the Advance Tax should be deposited.

Important Points

Late payment of interest

The Advance Tax Payment must be done on time. In the event of late payment of Advance Tax, the taxpayer is responsible for 1% interest per month.

Who has to pay the Advance Tax?

Every taxpayer, whether an employee, freelance worker, or a company owned by a corporation, OPC, LLP, or corporation, must pay income tax in advance if the tax is more than Rs.10,000/-  in the fiscal year.

What is Presumptive Taxation?

The Presumptive Tax charge is Governed by Section 44AD of the Income Tax Act. Any business with sales of less than Rs 2 crore has to be taxed presumptively. You must announce 8% profit for non-digital transactions or 6% for digital transactions, whichever applies.

The following companies are exempt from suspected taxation:

  • Life insurance agent.
  • Commissions of all kinds.
  • The business of traveling, renting, or renting a transport car.

Who is exempt from the Advance Tax?

An individual, HUF, or a company whose income is taxed based on the assumed Income Tax base is not required to pay tax in advance. This assistance is usually available to small businesses by paying taxes as a percentage of sales rather than actual profits.

Interest on Tax Deferral

Income Tax must be paid approximately in the financial year itself. The legal requirement to pay Advance Tax is binding if tax is payable in excess of Rs.10,000/- for one financial year.


Calculate your Advance Tax Know what is Advance tax and who should pay it. Find out how to calculate advance tax and due dates for advance tax payment with SettleMyTax.

  1. Can I pay Advance Tax after the due date?

Yes, you can pay Advance Tax after the due date. However, after the due date, interest due to late payment will also be charged.

  1. What is the penalty for late payment of Advance Tax?

According to section 234B: If up to 90% of the input tax liability is not paid at the end of the financial year, 1% of the ordinary interest is considered a contract penalty.

  1. Why does the person pay Advance Tax?

If the tax liability is more than 10,000,  payment of Advance Tax is mandatory. However, the company automatically deducts the TDS tax on wages.

  1. Who is subject to Advance Tax?

Under Section 208 of the Income Tax Act 1961, everyone whose tax liability has prepaid Rs.10,000/-

  1. How to calculate the advance tax payment?

The advance Tax is calculated by applying the applicable tax rate to the estimated individual income for the year.

  1. Can an employee pay Advance Tax?

Yes, an employee can also pay Advance Tax. In fact, advance taxes apply to all assessments, including employee salaries