Advance tax payment: September 15 is the last date to pay the second installment of your advance tax. Advance tax, in simpler terms, refers to the prepayment of tax liabilities before the conclusion of a fiscal year, also known as an advance tax or pay-as-you-earn scheme. This payment becomes necessary when an individual’s tax liability exceeds Rs 10,000 within a fiscal year. Notably, advance tax is paid in instalments on specified due dates and must be paid within the same year the income is earned.
Every taxpayer with an estimated tax liability of Rs 10,000 or more in a financial year is liable to pay advance tax. Specifically:
- Salaried individuals are required to pay advance tax on income earned from their jobs if their total tax liability exceeds Rs 10,000 in a financial year.
- Freelancers should pay advance tax on their varying sources of income earned throughout the year if their total tax liability surpasses Rs 10,000 in a financial year.
- Businesses can pay advance tax under the presumptive taxation scheme of Section 44AD for the income generated through their company.
- Senior citizens who have earned business income in a financial year are also obligated to pay advance tax.
- Independent professionals like doctors, lawyers, and architects fall under the presumptive scheme as per section 44ADA and are required to settle their entire advance tax liability in a single installment on or before 15th March.
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How advance tax is calculated
One can estimate their total income by summing up earnings from all sources for the full financial year, spanning from April 1st to March 31st. After this, subtract all eligible deductions and exemptions applicable to your income. Proceed to calculate the tax amount on this income based on the tax regime you have chosen.
Deadlines for Business Owners, Self-employed and Companies are:
| Instalment | Due Date of Tax Instalment | Amount of Tax Payable |
| 1st part | Either on or before June 15 | At least 15% of the advance tax liability |
| 1st part | Either on or before Sept 15 | At least 45% of the advance tax liability |
| 2nd part | Either on or before Dec 15 | At least 75% of the advance tax liability |
| 3rd part | Either on or before March 15 | 100% of the advance tax liability |
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How can you pay advance tax online?
Here is a step-by-step guide to make an advance tax payment on the Income Tax Department’s official website (https://www.incometax.gov.in/iec/foportal/):
- Start by visiting the Income Tax website at https://www.incometax.gov.in/iec/foportal/
- Once on the website, locate and click on the ‘e-Pay tax’ option. Enter your PAN, mobile number, and proceed by clicking ‘continue.’ You will then need to enter the OTP received on your registered mobile number.
- Next, navigate to the ‘Advance tax’ section.
- Choose the appropriate assessment year and then select ‘advance tax’ from the drop-down menu.
- Enter the tax amount as required and proceed by clicking ‘continue.’ You will need to select your preferred payment method before proceeding.
- To finalise the payment process, click on ‘Pay Now.’
- To make the payment, you can choose net banking, debit card, or UPI.
- After payment, you will get a notification
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