Ambit of Advance Tax

What is Advance Tax?

Advance Tax is where an assessee pays the government taxes on your income right throughout the year, i.e., payment of taxes within the Financial Year. It can be called as ‘Pay-as-you-Earn’ scheme.

Who shall pay Advance Tax?

Advance Tax should be paid by all the assessee’s where the Tax payable by him during the financial year is ₹ 10,000 or more. While computing the tax liability, income under all the heads should be considered.

Who is exempted from payment of Advance Tax?

Resident Individuals not having any income chargeable under the head “Profits and Gains from Business or Profession” AND of the age 60 or more.

How to compute Advance Tax?

Step 1: Arrive at Estimated Taxable Income# for current Financial Year. (Consider income from all the sources of heads)

Step 2: Calculate the Tax on Estimated Taxable Income as derived in Step 1 as per the rate provided by Finance Act for the relevant Assessment Year.

Step 3: Reduce the Rebate u/s 87A* (if applicable)

Step 4: Add surcharge to above computed Tax Liability

Step 5: Add the Education Cess @ 3%

Step 6: Deduct the followings:

• Relief, if any, u/s 89, 90, 90A and 91
• Credit, if allowable u/s 115JAA or 115JD
• TDS/ TCS on income considered above in computing the total income.

#Estimated Total Income is derived after allowing deductions under Chapter VI A and set-off of brought forward losses.

*Rebate of  Rs.2000 is allowable on tax payable where the Total Taxable Income of an assessee is LESS than ₹ 500,000 during the Financial Year.

Payment of Advance Tax

Instalments for payment of Advance Tax are pre-defined in the Act along with the due dates. These are listed as under:

Due Date	Amount Payable	Amount Payable
15th June	Not Applicable	Not less than 15%
15th September	Not less than 30%	Not less than 45%
15th December	Not less than 60%	Not less than 75%
15th March	100% of such advance tax	100% of such advance tax

Note: Where the last date on which the insta