Advance Tax Due Dates and Penalty

It’s important to fulfil all your tax obligations within the due date. Thus, every taxpayer must clearly understand advance tax dates and penalties in India. Knowing these will help you avoid unnecessary complications, save money and stay compliant with tax laws. 

Let’s learn about the advance tax due dates for companies and individuals and the consequences of failing to pay the advance tax on or before the due date.

Advance tax is the income tax that liable taxpayers pay in advance rather than a lump-sum payment at the end of a financial year.  

It is paid in four instalments throughout the financial year, and the Income Tax Department decides the advance tax deposit date.  

Individuals and companies whose estimated tax liability for the year is more than or equal to ₹10,000 are liable to pay advance tax as per section 208 of the Income Tax Act, 1961. Senior citizens aged 60 years or above who do not have any income from business and salaried people who pay the TDS are exempted from paying advance tax.

The stipulated deadline for filing advance tax for financial year 2023-24 or assessment year 2024-25 are given below for each category of taxpayer. Making advance tax payment within these due dates will help avoid any additional charges or penalties. So, checkout the advance tax payment due dates below:

Failure to make any advance tax payment, delay in paying the advance tax installments, or paying lower than the required liability attract some interest in default payment for the taxpayer. The interest for missing the advance tax deposit date is levied under two sections, 234B and 234C.

Advance Tax Penalty Interest Under Section 234B

Taxpayers are liable to pay interest on default payment of advance tax under section 234B if they are liable to pay advance tax but haven’t paid it. Also, an interest of 1% is charged if a taxpayer pays less than 90% of the assessed tax before the end of a fiscal year. 

Let’s understand with an example. 

Suppose a self-employed professional is liable to pay an estimated tax of ₹2 lakhs for a financial year. So, as per the advance tax payment schedule, he is liable to pay 30% of the estimated tax liability on or before 15th September, which comes out to be ₹60,000.

However, assuming that he pays his entire tax liability of ₹2 lakhs on 1st March 2022 (i.e., after the advance tax last date of 15th March 2022), he would have to pay interest penalty under section 234B, which is 1% per month.

Since the delay period is six months (from 15th September 2021 to 1st March 2022); therefore, the interest payable would be ₹60,000 x 1% x 6 months = ₹3,600.

[Source]

Advance Tax Penalty Interest Under Section 234C

Under Section 234C, you will have to pay an interest of 1% on advance tax charged per month or part of a month, in case of short payment or non-payment of advance tax on or before the advance tax due dates. 

For taxpayers who opted for the presumptive taxation scheme u/s 44AD or 44ADA, interest shall be levied u/s 234C if tax paid on or before advance tax last date is less than 100% of the tax payable.

For example: If a taxpayer is supposed to pay ₹10 lakhs as advance tax by 15th September, but they miss the advance tax due date and finally pay the instalment on 15th December, they are liable to pay 1% interest for three months. So, the total advance tax interest or the penalty charges payable would be ₹30,000.

[Source]

• Taxpayers can claim a refund of advance tax while filing Income Tax Return by providing the details of tax deposited, in case they have paid more than their actual advance tax liability.
• If there is a change in the tax liability after the taxpayer has paid some of the instalments on or before the advance tax due date, they can revise the quantum of advance tax in the remaining instalments and pay it as per the revised tax.
• Taxpayers can compute their interest applicable on default payment of advance tax using an online advance tax calculator on the IT department’s official website. 

[Source]