Tend to miss the advance tax due date? Think again!

Jyoti VasonThe heading of the article must have raised an alarm in your mind but yes, the reality is that the taxes in India are required to be paid in advance that is “pay-as-you-earn” and not at the end of the year. The scheme refers to paying most part of the taxes during the financial year itself to ensure a steady flow of the income for the government and applies to all category of tax payer’s i.e corporate as well as non-corporate. Non-compliance may attract penal consequences thus It is imperative to understand the correct provisions i.e applicability, due date etc. When is it applicable?Advance tax is applicable only in case where the total tax liability of a taxpayer exceeds INR 10,000. Further, it is not applicable in case of resident senior citizens aged above 60 years (not having income from business and profession), but if senior citizen is a non-resident or have income from business then they are subject to advance-tax provisions. In addition to the above, tax payers having income from business and are taxed under presumptive taxation u/sec 44AD are also exempt from payment of advance tax.I am a salaried employee? Am I liable to pay advance tax?If you are a salaried employee, your employer is required to deduct tax at source (TDS) on your salary income however if you have income from other sources such as income from rent, capital gain on shares or sale of immoveable property, interest on fixed deposits or saving bank accounts, winnings from lottery or races, you are required to pay the advance tax like other categories of tax payers. Salaried employees also have an option to declare the income from other sources to the employer and the get the tax deducted in the form of TDS. By doing this, they can avoid the hassle of making payment of advance tax.How and when it is payable? Due date and the amount of advance tax payable is different for corporate and non-corporate assessees (including businessmen and professionals).Due dates for corporate assessees Due dates for non-corporate assesseesAmount payable due date of paymentHow to compute the amount of advance tax and pay?Individuals are required to project their annual income in the best possible manner and calculate the taxes similar to the tax calculation done at the time of filing of tax return. Please ensure to give the credit of TDS on all your income (refer Form 26AS to capture the details of TDS deducted on all your incomes) while calculating the advance tax.The payment of advance tax can be done by using the tax payment challans (ITNS 280) at the designated bank branches or through the online portal of the Income-tax department. The online payment facility has given a sigh of relief to the taxpayers who are non-residents but still have income in India. They can easily make the payment now from any corner of the world.What if the due date of the payment is missed?If you could not pay advance tax before the due-date, here are the implications for you:-In case payment of tax is done after the expiry of last date of filing of return of income, simple interest @ 1% per month is applicable under Sec 234 A till the time the taxes are paid and the return is filed.In case advance tax paid is less than 90% of the assessed tax, simple interest @ 1% per month is applicable under Sec 234 B from 1 April following the financial year till the month when the taxes are actually paid.Lastly, in case where the advance tax is paid, however there is a deferment in payment of instalments as per the prescribed due date, simple interest @ 1% for a period of 3 months (each time the due date is missed) is applicable under Sec 234 C. However, in case of last instalment payable on 15 March, the interest is payable @ 1% per month for 1 month.To sum up, do remember to pay your advance tax on time and think again in case you are planning to miss the due-date. You may end up paying more!!Author is senior tax professional with EY India(Views expressed are personal)