Meeting the Advance Tax Deadline: A Step-by-Step Guide to Ensure Timely Payment by December 15

Reminder: December 15 Deadline for Third Instalment of Advance Tax Payment to Avoid Penalties and Interest.

Act Now: December 15 – Final Day to Settle Your Advance Tax Payments

The statement emphasizes the urgency for taxpayers to pay the third instalment of advance tax, with only two days remaining until the December 15 deadline.

Deadline Reminder: The message serves as a reminder that the deadline for the third instalment of advance tax is approaching rapidly. This creates a sense of urgency for individuals who fall under the requirement to pay advance tax.

Time Sensitivity: By highlighting the two-day time frame until December 15, the statement underscores the immediate need for action. Taxpayers are encouraged to act promptly to meet the deadline.

Importance of Compliance: The use of the term “crucial” emphasizes the importance of adhering to the deadline. Meeting the deadline is crucial for taxpayers to avoid potential penalties and interest that may be imposed for late payments.

Consequences of Delay: The statement clearly communicates the potential consequences of failing to make the advance tax payment on time. Penalties and interest for delay are mentioned, indicating the financial repercussions of non-compliance.

Call to Action: The phrase “make their payments by this date” serves as a direct call to action, urging taxpayers to fulfill their obligations promptly.

Aims to inform taxpayers about the imminent deadline for the third instalment of advance tax, stressing the need for timely compliance to avoid penalties and interest associated with delayed payments.

Individuals required to pay advance tax according to Section 208 of the Income Tax Act, 1961.

Threshold for Advance Tax: Individuals with projected tax liabilities of ₹10,000 or more are mandated to pay advance tax. This projection considers the tax deducted at source (TDS) from the previous fiscal year.

Legal Basis: The reference to Section 208 of the Income Tax Act, 1961, indicates the legal provision that establishes the requirement for advance tax payment. Section 208 outlines the rules and conditions for determining the liability of individuals to pay advance tax.

Projected Tax Liabilities: The term “projected tax liabilities” implies an estimate of the total tax obligation that an individual is expected to have for the current financial year. This projection is based on various income sources and deductions.

Consideration of TDS: The requirement takes into account the tax deducted at source (TDS) from the previous year. TDS is a mechanism where tax is deducted at the source of income, and the individual receives income after deduction of taxes.

Individuals meeting the specified criteria are obliged to pay advance tax, and this provision is grounded in Section 208 of the Income Tax Act, 1961. The criteria include a threshold of ₹10,000 or more in projected tax liabilities, considering TDS from the previous fiscal year.

The consequences of default in paying advance tax, specifically mentioning penal interest as governed by Sections 234B and 234C of the Income Tax Act, 1961.

Default Consequences: The statement addresses the repercussions of not paying advance tax on time. In case of a default, penal interest is imposed as a consequence.

Legal Framework: The interest levied is regulated by Sections 234B and 234C of the Income Tax Act, 1961. These sections provide the legal framework for calculating and imposing interest in case of default in payment.

Interest Rate: The interest is charged at a rate of 1% per month or part thereof. This indicates the monthly interest rate applied to the outstanding amount for the period of default.

Monthly Accumulation: The mention of “1% per month or part thereof” signifies that the interest accrues on a monthly basis. Even a fraction of a month’s delay can result in the imposition of interest for that period.

Eligible Group: Resident senior citizens aged 60 years or older during the relevant financial year are identified as the eligible group for the exemption.

Income Source Consideration: The exemption applies to those senior citizens who do not have income from business or profession. This criterion specifies that the exemption is based on the nature of income sources, excluding business or professional income.

Age Requirement: The age threshold for eligibility is set at 60 years or older. This aligns with the definition of senior citizens in many jurisdictions.

Exemption from Advance Tax: The key point is that individuals meeting the specified criteria are exempt from the requirement of paying advance tax. This exemption acknowledges the unique financial situations and income sources of senior citizens.

Advance tax due dates for FY 2023-24

Nature of Advance Tax:

• Advance tax differs from the traditional method of paying taxes in a lump sum at the end of the financial year.
• Instead of a single annual payment, advance tax is paid in instalments at specified intervals throughout the fiscal year.

Installment Payments:

• Taxpayers are required to make periodic payments, known as instalments, to meet their estimated tax liability for the ongoing financial year.
• These instalments serve as prepayments of income tax based on an individual’s projected income and tax liability for the entire year.

Determining Due Dates:

• The Income Tax Department sets specific due dates for each instalment.
• Taxpayers need to adhere to these scheduled dates for making advance tax payments.

Calculation of Instalments:

• The amount of each instalment is calculated based on the taxpayer’s estimated annual income and the applicable tax rates.
• Taxpayers are expected to pay a certain percentage of their projected tax liability in each instalment.

Preventive Measure Against Tax Evasion:

• Advance tax helps prevent tax evasion by ensuring that individuals and businesses make timely payments throughout the year, rather than deferring the entire tax liability to the end.

Flexibility and Predictability:

• This system provides flexibility for taxpayers by allowing them to manage their cash flow more effectively through smaller, periodic payments.
• It also enables the government to collect revenue in a more predictable manner.

For the financial years 2022-23 and 2023-24, the due dates for advance tax payments are as follows:

1. June 15
2. September 15
3. December 15
4. March 15

Taxpayers are expected to make their advance tax payments on or before these specified dates to avoid penalties and interest for late payment. It’s always advisable to verify such details with the official tax authorities or consult with a tax professional, as tax regulations may be subject to change.