Advance tax payment calculation in India involves a step-by-step process. Follow these steps to estimate your advance tax:
Step 1: Estimate your Total Income for the Financial Year
Gather information on all your income sources for the entire financial year. Include the following heads of income to calculate the income earned:
- Salary
- Rental income
- Income from any interest earned from FDs, savings account, etc.
- Capital gains
- Income of minors if it is added to that of the taxpayer
- Any other income
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Step 2: Calculate Deductions and Exemptions
Subtract eligible deductions from your total income that are applicable to you under various sections of the Income Tax Act, like 80C, 80D, etc.
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Step 3: Consider TDS
If you have any Tax Deducted at Source (TDS) on certain income, subtract it from the total income as well. The amount received will be your taxable income. This is the amount on which you will calculate your income tax liability.
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Step 4: Apply Applicable Tax Rates
As per the income tax slab applicable to your taxable income and regime opted, apply the corresponding income tax rates and calculate your payable income tax. Also, apply the 4% cess on the tax to arrive at your total income tax liability.
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Step 5: Advance Tax Payment Calculation
Now, divide your total income tax liability for the financial year into four equal installments as follows:
- On or before June 15: 15% of the total tax liability
- On or before September 15: 45% of the total tax liability
- On or before December 15: 75% of the total tax liability
- On or before March 15: 100% of the total tax liability
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Also, remember to consider the following points when doing advance tax calculation:
- The tax slab rates are applicable to you.
- Tax rebate under Section 87A.
- The TDS to be deducted from your income or any advance tax already paid.
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