FAQs on Advance Tax

Question 1

1. What is advance tax in taxation?

Accepted Answer

Ans. Advance tax is a system of paying income tax in installments throughout the financial year, rather than paying it all at once at the end of the year. It is applicable to individuals, self-employed professionals, and businesses whose tax liability exceeds a certain threshold set by the tax authorities.

Question 2

2. How is advance tax calculated?

Accepted Answer

Ans. Advance tax is calculated based on the estimated income for the financial year. It is generally paid in four installments, with the first installment due by June 15th, the second by September 15th, the third by December 15th, and the final installment by March 15th. The calculation involves estimating the total income, deducting any applicable deductions, and applying the tax rates as per the income tax slabs.

Question 3

3. What happens if advance tax is not paid?

Accepted Answer

Ans. If advance tax is not paid or is paid in an insufficient amount, the taxpayer may be liable to pay interest under the provisions of the Income Tax Act. The interest is charged at a specified rate on the shortfall amount and is calculated from the due date of each installment till the date of actual payment.

Question 4

4. Can advance tax be paid online?

Accepted Answer

Ans. Yes, advance tax can be paid online through the income tax department's official website or through authorized banks. Taxpayers can generate a challan online, select the appropriate payment mode, and make the payment using internet banking, credit card, or debit card. Online payment provides convenience and instant acknowledgment of the payment.

Question 5

5. Is advance tax applicable to all taxpayers?

Accepted Answer

Ans. No, advance tax is not applicable to all taxpayers. It is applicable to individuals, self-employed professionals, and businesses whose estimated tax liability exceeds Rs. 10,000 in a financial year. Salaried individuals who receive income only from salary and have no other sources of income are not required to pay advance tax.

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