Advance tax means income Tax should be paid in advance instead of lump sum payment at year end. It is also known as pay as you earn tax. These payments have to be made in instalments as per due dates provided by the income tax department.
Advance tax is the income tax payable if your tax liability exceeds Rs 10,000 in a financial year. Advance tax should be paid in the year in which the income is received.
Advance tax is applicable when an individual has sources of income other than his/her salary. For instance, if one is earning through capital gains, interest on investments, lottery, house property or business, the concept becomes relevant.
Notes: For the purpose of Advance Tax calculation firstly we will have to find out estimated net income during the financial year then after we should check that his/her tax liability exceed Rs 10,000/- or not. If exceeds than we will have to pay advance tax amount as per Advance Tax rule in Income Tax Act.
Due Dates for the payment of Advance Tax
| Due Date | Advance Tax Payable |
| On or before 15th June | 15% of advance tax |
| On or before 15th September | 45% of advance tax less advance tax already paid |
| On or before 15th December | 75% of advance tax less advance tax already paid |
| On or before 15th March | 100% of advance tax less advance tax already paid |
For taxpayers who have opted for Presumptive Taxation Scheme under section 44AD & 44ADA – Business Income
| Due Date | Advance Tax Payable |
| On or before 15th March | 100% of advance tax |
Advance Tax Payment Online Process
There are following steps of Advance Tax Payment:
- Step 1: Visit the official TIN tax e-payment page (https://www.incometaxindia.gov.in/Pages/tax-services/pay-tax-online.aspx).
- Step 2: Under “Non-TDS/TCS”, choose “Challan No./ITNS 280” and click “Proceed”.
- Step 3: You will be redirected to Challan 280, which must be filled in 30 minutes.
Note: Tax applicable – If company the select 0020 or if Other than Companies then select 0021 then select 100 (Advance Tax) then mode of payment then fill PAN No., Assessment Year and full address.
- Step 4: Enter the captcha code and click “Proceed”. The name on your PAN would appear.
- Step 5: Click “Submit”.
- Step 6: You will be redirected to the Net Banking page of your bank.
- Step 7: Double check the information before you make the payment.
- Step 8: You will get a receipt after the payment is successful. Save a copy or take a screenshot of it.
Example for Advance Tax Calculation:
Calculate Advance Tax
Proprietorship Firm: Anand & Co.
Business Profession: Engineering Services
Estimated Annual Gross Receipts: Rs. 25,00,000/-
Estimated Annual Expenses: Rs. 16,00,000/-
PPF Deposit: Rs. 50,000/- , LIC Premium paid: Rs. 35,000/- & Medical Insurance: Rs. 15,000/-
Interest received on Fixed Deposit: Rs. 50,000/-
TDS deducted by the client Rs. 50,000/-
| PARTICULARS | AMOUNT (Rs) | AMOUNT (Rs) |
| Income from profession: | 9,00,000 | |
| Gross receipts | 25,00,000 | |
| Less: Expenses | 16,00,000 | |
| Income from other sources: | 50,000 | |
| Interest from fixed deposit | 50,000 | |
| GROSS TOTAL INCOME (A) | 9,50,000 | |
| Less: Deduction under section 80C (B) | 85,000 | |
| Contribution to PPF | 50,000 | |
| LIC premium | 35,000 | |
| Deduction under section 80D (C) | 15,000 | 15,000 |
| TOTAL INCOME (A-B-C) | 8,50,000 | |
| TAX on Income (D) | 82,500 | |
| Add: Education Cess @ 4% on Tax (E) | 3,300 | |
| Total Tax (D+E) | 85,800 | |
| Less: TDS | 50,000 | |
| TAX PAYABLE IN ADVANCE | 35,800 |
ADVANCE TAX PAYABLE UPTO
| Due date | Advance tax payable | Amount (Rs) |
| 15th June | 15% of Advance tax | 5,370 |
| 15th September | 45% of Advance tax | 16,110 (Need to pay Tax 30% because already pay 15% before 15th June) |
| 15th December | 75% of Advance tax | 26,850 (Need to pay Tax 30% because already pay 45% before 15th September) |
| 15th March | 100% of Advance tax | 35,800 (Need to pay Tax 25% because already pay 75% before 15th December) |
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