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We all know that we need to pay income tax in case the total
income for the financial year exceeds the income tax exemption
limit. But the government wants you to pay taxes as you earn
rather than paying it all at the end of the financial year. This helps
government to keep running for the entire year.
In case your tax liability is more than Rs 10,000 for the
financial year, you need to pay Advance Tax as per below
schedule (revised in Budget 2016):
1. 15% of total tax by June 16
But there is a catch, in case you are salaried and also have
income from other sources like fixed deposits, side business
etc you must calculate your tax liability and pay advance tax
accordingly. For e.g. you are in 30% tax bracket and are expecting
Rs 1 lakh as interest income over the financial year. You will need
to pay advance tax as required.
Situations where Salaried tax Payers should pay Advance Tax:
ASSESSMENT TAX
Now in case you miss the first installment, you will need to pay a
penalty of Rs 150 (1% of Rs 15,000) for every month of delay.
Case 1:
You did not pay in June but paid entire Rs 45,000 on September
15. In this case you will need to pay penalty of Rs 450 (1% of Rs
15,000 X 3 months).
Case 2:
You did not pay anything in June, September and December and
made all the payment in March. In this case you will need to pay
the penalty as follows:
For June installment: Delay of 9 months = 1% of 15,000 X 9 = Rs
1,350
For September installment: Delay of 6 months = 1% of (45,000
15,000) X 6 = Rs 1,800
To Conclude:
You should calculate your Tax liability for the year and check if you
have complied with the Advance Tax installments. In case you do
not do so you need to pay penalty of 1% per month for every month
of delay which can increase total tax liability by up to 4% (as in the
example above). Salaried tax payers should also keep watch on
income from other sources and comply with Advance tax
payment.
Have you paid your Advance Tax?