Advance Tax: first instalment for FY 2015-16 is due on 15th September

If you expect your total tax dues to exceed Rs 10,000 in financial year 2015-16, advance tax rules may apply to you. What this means is that instead of paying lump sum taxes, your taxes must be paid at regular intervals. These intervals are as per the advance tax payment schedule of the Income Tax Department.

The first instalment is payable on 15th September where 30% of your tax liability must be paid.

If you are salaried – TDS deductions by your employer take care of this requirement. However, if you have a large income from interest or house property income, which the employer may not know of – you must pay advance tax. Having an additional large income which is not subjected to TDS increases your annual tax liability, thereby making advance tax applicable to you.

In situations where TDS has already been deducted – it’s likely you fall in a higher slab rate. This may be true for freelancers or professionals who run their own businesses. Advance tax rules almost always apply to them – usually clients don’t deduct TDS or if they do its lower than the slab applicable to your total income.

To pay 30% of your liability you’ll have to estimate your annual total income for the year. Include all sources and make calculations of your total tax dues just like you do for your tax return.

Gross total income (Income from 5 heads of income)

Less: Deductions under section 80

Total expected income

Calculate tax (including cess) on this income

And pay 30% of it before 15th September.

 

Do note that non-payment of advance tax attracts interest under section 234B and 234C.

Exception – When you have earned capital gains during the year, it’s hard to estimate your advance tax liability accurately. In such cases you can catch up on any shortfalls in the remaining instalments and no interest under section 234B or 234C shall be levied.

 

We help freelancers and businesses estimate and pay their advance tax liability timely. Reach out to us support@cleartax.in

 

ALSO, here’s a quick reminder for your tax duties for the last financial year 2014-15.

If you haven’t filed your tax return yet for financial year 2014-15 (assessment year 2015-16)

You can still do so by 7th September, due date has been extended!

4 Responses to Advance Tax: first instalment for FY 2015-16 is due on 15th September

  1. Amit September 6, 2015 at 6:52 pm #

    I have a question.
    My father owns a house which is currently on rent.
    But I am receiving the rent in my bank via cheque.

    So while filing ITR, can i show this rent under ‘income from house property’?
    The house is in my father’s name. Will it create problems?

    Please reply!!

    • cleartax-team September 7, 2015 at 2:09 pm #

      Hi Amit, since your father is the owner of this house property, the rental income has to be taxed & reported in tax return.

  2. dheerajsp September 11, 2015 at 1:01 pm #

    Hi, I work in India and have Restricted stock units of the company I work for. The RSU’s will be listed in US. The RSU is vesting on 13th September. As per US rules there will be tax deducted @ rate of 30.9% on the same.

    Does the above RSU qualify as income from other source for the current financial year &
    Do i need to pay advance tax on the same.

    My view is that since a tax has already been deducted in US there should not be any tax deduction in India in the current year

    Thanks!

    • cleartax-team September 14, 2015 at 4:11 pm #

      Hi Dheeraj, given the facts it appears that their may not be any advance tax liability on your earnings. However, a complete answer can be provided by calculating your total earnings and tax paid thereon both within and outside India so far and whether that meets advance tax guidelines.

      If you need help do write to us support@cleartax.in