Do you have to pay Advance Tax in September?

Advance Tax

What is Advance Tax? Advance Tax simply means that you are required to pay the government – tax on income as you earn such income. If in a financial year your total tax liability exceeds Rs 10,000 you will be required to pay advance tax. Senior Citizens (those of 60 years of age or more) are exempt from advance tax.

When is this due? The first installment of Advance Tax (for a non-corporate tax payer) is due on the 15th of September 2014, when 30% of your advance tax is payable.

In case of salaried employees – for whom the employer is liable to deduct and deposit tax, advance payment of tax is already taken care of. Each month the employer deducts and deposits tax on your Income. However, in case you also have incomes from other heads – any other heads of income, you must either disclose such income to your employer, so they can deduct and deposit tax on it or do so yourself.

How to assess your Advance Tax liability – Add your Income from all the heads and estimate your tax liability for the whole year exactly in the same manner as you would prepare your return at year end. Reasonably estimate all income heads (including capital gains, lottery winnings etc). In case your total tax liability exceeds Rs 10,000 you are liable to pay Advance Tax, unless of course you are a senior citizen or your tax is arising due to salary income (in which case employer is already deducting and depositing tax).  From your total tax liability – do remember to reduce any TDS that has already been deducted. You need to deposit 30% of this total tax payable estimated for the year, by 15th of September.

Note that you are not required to submit any supporting documents or statement of income while paying your advance tax.

How to pay Advance Tax? Here’s how you can pay your advance tax to the government Pay Advance Tax

In case due to some reason you are unable to pay Advance Tax note that Interest under Section 234B and Section 234C is liable to be paid by you.

If you need help with estimating your annual income and calculating tax thereon or if you have any questions– do reach out to us and we will be happy to assist you!

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