Advance Tax is a direct tax (income tax) payable in advance by an assessee on his estimated total income of a financial year.It is also termed as pay-as-you-earn as it is to be paid before the end of the Financial Year.As per section 208 of Income Tax Act, advance tax liability arises only if estimated tax liability exceeds Rs.10,000.
Advance tax can be calculated by applying the slab rate applicable to a financial year on his total total estimated income for that year.For example your total income for FY 2018-19 is Rs.5,50,000, then your estimated liability is Rs.23,400 calculated as follow.
| First 2,50,000 | Nil |
| 250000-500000 | 5% of 250000 = 12500 |
| 20% of (550000-500000) | 10,000 |
| Total tax | 22,500 |
| Add : Cess @ 4% | 900 |
| Total tax | 23,400 |
Section 208 of Income Tax Act 1961, states that an assessee whose estimated tax liability is more than Rs.10,000, is required to pay Advance Tax.However a senior citizen isn’t required to pay advance tax if his total income doesn’t includes income under head business & profession.
Due dates of payment of Advance Tax are following: -
| Due Date | Advance Tax Payable |
|---|---|
| 15th June | Minimum 15 % of Advance Tax |
| 15th September | Minimum 45 % of Advance Tax - Advance Tax already paid |
| 15th December | Minimum 75 % of Advance Tax - Advance Tax already paid |
| 15th March | 100 % of Advance Tax - Advance Tax already paid |