Today, March 15, 2024, marks the final deadline for taxpayers in India to settle their fourth and final installment of advance tax for the financial year 2023-24. Missing this deadline can result in penalties and interest charges.

Advance tax allows taxpayers to spread out their income tax payments throughout the year, rather than paying a large sum at the end of the financial year. This system ensures a steady flow of tax revenue for the government.

Who Needs to Pay Advance Tax?

Salaried individuals, freelancers, and businesses: If your total tax liability is expected to be more than Rs 10,000 for the financial year, you are required to pay advance tax.

Senior citizens: Those aged 60 and above who do not have business income are exempt. However, senior citizens with business income must pay an advance tax.

Presumptive income taxpayers: Businesses and professionals under the presumptive taxation scheme (sections 44AD and 44ADA) have the option to pay their entire advance tax in one go by March 15th or by March 31st.

How To Pay Advance Income Tax?

Eligible taxpayers are required to make advance income tax payments in four installments throughout the financial year, typically in June, September, December, and March. These payments can be made conveniently online via either the official website of the Income Tax Department (incometaxindia.gov.in) or the National Securities Depository.

Act Now To Avoid Penalties

The Income Tax Department urges all taxpayers to settle their advance tax dues before the deadline.
Failure to do so can lead to interest charges under sections 234B and 234C of the Income Tax Act.

For more information on advance tax and how to calculate your liability, taxpayers can visit the Income Tax Department’s website.

The income tax department has launched an electronic campaign for taxpayers who have carried out significant transactions in the current financial year. Such taxpayers will be informed through email and SMS, with the department urging them to deposit their due advance tax on or before March 15, 2024. The campaign was started after the income tax department identified individuals and entities with discrepancies between transactions carried out and the tax deposited. The department said that the aim of this campaign is to encourage such taxpayers to deposit the “right” amount as tax.

“The Income Tax Department has received certain information on specific financial transactions undertaken by persons or entities during the financial year 2023-24. On the basis of an analysis of the taxes paid so far during the current financial year, the Department has identified persons /entities whose payment of taxes for FY 2023-24 (A.Y. 2024-25) is not commensurate with the financial transactions made by the persons/entities concerned, during the said period,” the income tax department said in a release on Sunday.

The department receives information of specified financial transactions of taxpayers from various sources. To increase transparency and to promote voluntary tax compliance, this information is reflected in the Annual Information Statement (AIS) and is available to the persons/entities for viewing. Officials said that the value of ‘Significant Transactions’ in the AIS has been used for carrying out this analysis.

What is advance tax?

It is the income tax that is paid in advance instead of lump sum payment. In other words, it is the tax that individuals pay as they earn. These payments have to be made in instalments as per due dates provided by the income tax department.

Who needs to pay advance tax?

Salaried individuals, freelancers and businesses with a total tax liability of Rs 10,000 or more in a year need to pay advance tax. In case of senior citizens (people aged 60 or more), and do not run a business, are exempt from paying advance tax. This is applicable only to those who have business income.

Further, taxpayers who have opted for the presumptive taxation scheme under Section 44AD have to pay the whole amount of their advance tax.