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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.

What is Advance Tax?

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.

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Advance Tax Payment Due Dates for FY 2023-24

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:

Advance Tax Due Dates for Individuals and Companies

The advance tax due date for companies and individuals with income from salary and other sources, such as fixed deposits, is 15th March 2023 for the last instalment. They must pay the taxes in four instalments throughout the year, as given below:

Advance Tax Last Date	Instalments	Advance Tax to Pay
On or before 15th June 2023	First instalment	15% of tax liability
On or before 15th September 2023	Second instalment	45% of tax liability
On or before 15th December 2023	Third instalment	75% of tax liability
On or before 15th March 2024	Fourth instalment	100% of tax liability

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Advance Tax Due Dates for Self-Employed and Business Entities

The advance tax deposit date for self-employed individuals and those who have income from business, is 15th March for the last instalment. They are liable to pay the advance tax in three instalments, which are as follows:

Advance Tax Last Date	Instalments	Advance Tax to Pay
On or before 15th September 2023	First instalment	30% of tax liability
On or before 15th December 2023	Second instalment	60% of tax liability
On or before 15th March 2024	Third instalment	100% of tax liability

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Advance Tax Due Dates Under Presumptive Taxation Scheme u/s 44AD and 44ADA

All taxpayers eligible for the Presumptive Taxation Scheme under Sections 44AD and 44ADA, including professionals such as doctors, lawyers, architects, etc., do not have to worry about advance tax dates for various instalments. They are required to pay their entire advance tax liability as follows:

Advance Tax Last Date	Advance Tax to Pay
On or before 15th March 2024	100% of tax liability

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What is the Penalty for Missing Advance Tax Payment Due Date?

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.

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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.

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Important Points to Remember Regarding Advance Tax Dates

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.

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FAQs on Advance Tax Due Date

All

Is it compulsory to pay advance tax for all?

No, only eligible taxpayers with an estimated tax liability of ₹10,000 or more in a financial year must pay advance tax.

Is a senior citizen with pension income supposed to pay advance tax?

Senior citizens (aged 60 and above) who don’t have income from business or profession are not liable for advance tax.

What is the penalty if I miss the advance tax deposit date?

If you miss the advance tax payment due date, you have to pay 1% interest levied per month u/s 234C. In addition, late interest/fee for advance tax default is also levied under Section 234B.

How many advance tax instalments do I need to pay in a financial year?

Individuals and companies are liable to pay advance tax in four instalments in a financial year. Self-employed taxpayers and those with business income must pay in three instalments. Taxpayers who opted for the presumptive scheme must pay the entire advance tax at once.

How to avoid paying interest charged under Sections 234B and 234C?

The only way you can avoid paying the extra interest charged at 1% per month or part of the month is to pay your advance tax liability on or before the advance tax deposit date for each instalment as decided by the Income Tax Department.

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