Skip to main content

Don’t miss the Advance Tax Deadline!


by my tax india on March 14, 2015 in Advance Tax, Income Tax Return

Advance Tax is simply your tax liability calculated in advance. If your tax liability in a year is more than Rs 10,000 the IT department wants you to pay tax on your income at regular intervals, instead of a lump sum payment. You should pay 100% of your tax liability by 15th March.
To be able to pay 100% of your tax by 15th March, you must estimate your income for the whole year and calculate & pay tax on it.
Usually salaried individuals do not need to worry about paying any advance tax. Your employer is already deducting TDS on your salary and depositing it with the government. However, if you have income which can trigger a shortfall in the taxes deposited against your PAN, you must pay advance tax. This shortfall may arise due to tax payable by you on interest income earned. Interest Income from fixed deposits is fully taxable, while on interest income from savings account a deduction of up to Rs 10,000 is allowed under section 80TTA and remaining is taxable. If you did not report your Rental Income to your employer, and tax is payable on it, this could also lead to a shortfall of tax deposited by you.
In case of Freelancers, where TDS may not have been deducted or where TDS deducted is not sufficient to meet their tax liability, payment of advance tax is very relevant. In all likelihood, freelancers will have tax liability outstanding when they estimate their taxes and they must pay 100% of this before 15th March.
So calculate your tax dues for your total income and make sure you have paid at least 90% of your tax dues before 31st March. If you are not able to deposit 90% of your taxes by 31st March, you’ll have to pay interest under section 234B which will be 1% simple interest calculated from 1st April till the time you pay the total outstanding amount. Additionally, since Advance Tax is supposed to be paid at regular intervals, in installments, your failure to do so shall also attract interest under section 234C based on the shortfall in payments.
Here is a simple guide you can use to pay Advance Tax. Note that you don’t need to submit any income details or supporting documents along with this payment of Advance Tax. No paperwork is required; you only need to pay the amount which is due.
In case you find out later than you have estimated and deposited more tax than you were supposed to – the excess paid shall be refunded to you by the Income Tax Department. Interest @ 6% per annum is also paid by the Income Tax department on the excess amount deposited, if this amount is more than 10% of your tax liability.
Reach out to us, if you need help with estimating your advance tax liability and paying it on time.

Comments

Post a Comment

Popular posts from this blog

Difference between Form 16 & Form 16A Some of our customers have written to us enquiring about the difference between Form 16 and Form 16A. In this article, we will tell you about both these forms and their importance while filing your income tax returns. Form 16 Form 16 is your  Salary  TDS Certificate.   If your income from salary for the financial year is more than the minimum exemption limit of Rs 2,50,000 your employer is required by the Income Tax Act to deduct TDS on your salary and deposit it with the government. If you have also disclosed your income from other heads to your employer, he will consider your total income for TDS deduction. If your income is below the minimum exemption limit your employer will not deduct any TDS and may not issue you this form. If you have worked with more than one employer during the year, you will have more than one Form 16. This Form 16 is a certificate, where the employer is certifying details regarding t...
Post a Comment
Read more
Tax benefits on Health Insurance by   My Tax India  on   March 8, 2015   in   Save Tax ,  Section 80 Deductions ,  Union Budget 2015-16 Here are the details of tax benefits in Budget 2015 when you purchase health insurance. These are applicable for financial year 2015-16. Deduction under section  80D  for self, spouse, dependent children – Rs 25,000 (preventive health check up of Rs 5,000 included) Deduction under section  80D  for parents (who are senior citizens) – Rs 30,000 ((preventive health check up of Rs 5,000 included). This deduction is allowed for both dependent and non-dependent parents. In case your parents are super senior citizens (more than 80 years old) and are uninsured you can claim a maximum of Rs 30,000 as deduction in your income towards their medical expenses. Therefore you stand to claim a total deduction of Rs 55,000 when you buy health insurance for yourself and your parents and save significant...
Post a Comment
Read more
Need Rent Receipts for HRA exemption? ClearSave is here To claim HRA exemption, you have to submit rent receipts to your employer. Usually employers need this proof of rent in January or February, before the financial year ends. It helps your employer give you exemption on HRA and adjust your TDS. Now you can prepare and print your rent receipts at  ClearSave . 1) Enter to clearsave .https://cleartax.in/save/rent and by Entering your rent and your door no. the below page will appear                  and now you should enter your name and your mail address and your owners name and owners pan number,from which date to till you would ike to take the receipt.      Just enter a couple of details to print these receipts and submit to your payroll department. You can even save & use them later. Remember to tell all your friends about it!           ...
Post a Comment
Read more