Deposit advance tax by 15th June to avoid interest!
Are you aware that you have to pay taxes as you earn? If you aren’t, then keep on reading to check your liability to deposit first instalment of advance tax by 15th June 2018. Income Tax Law requires you to pay taxes on income in the same financial year in which it is earned.
Who is liable to deposit advance tax?
As per Income Tax Act, 1961, any assessee whose annual tax liability, net of tax deducted/collected at source is likely to be Rs.10,000 or more is required to deposit tax in advance. However, senior citizens not having income from business/profession are not obliged to pay such tax in advance.
When & how much to deposit?
Advance tax is to be deposited in four instalments during the financial year in the below manner:
| Due Date | Advance Tax Payable |
|---|---|
| On or before 15th June, 2018 | 15% of advance tax payable |
| On or before 15th September, 2018 | 45% of advance tax payable |
| On or before 15th December, 2018 | 75% of advance tax payable |
| On or before 15th March, 2019 | 100% of advance tax payable |
Thus, you have to deposit 100% of the projected tax in the same financial year in which you earn the income.
Consequences if not paid?
If you do not deposit any advance tax or miss any of the instalments, then you are liable for interest payment at the time of filing your tax returns. Such interest is charged u/s.234B and 234C of the Income Tax Act which might go to 1-2% per delayed month on tax payable.
How to avoid interest if you miss the advance tax instalment?
If you are salaried and also having gains from sale of equity shares/mutual funds or any income from part-time freelancing, then you might forget to deposit advance tax before due date. In such cases, you may ask your employer to deduct additional tax from your salaries over the remaining months of the year. Thus, you can save interest burden on tax liability at the time of filings.
It is always advisable to estimate quarterly projection of your income and hence income tax for the year to help you in timely payment of advance tax.