Return filing for FY 2015-16 may be keeping you busy, but don’t forget to deposit advance tax timely.
What is advance tax?
Advance tax is applicable if your annual tax liability exceeds Rs 10,000. Advance tax means you should deposit tax with the government in advance instead of paying a lump sum at year end. Advance tax applies to all taxpayers. Almost always to freelancers and those running a business. Taxes for the salaried are usually taken care of by way of TDS. However, if they have significant income other than salary, say capital gains or rental income or a large interest income, advance tax shall be applicable to them.
First instalment of advance tax is due on 15th June for both individuals & corporates
As per Finance Act 2016, every taxpayer, both individuals and corporates, must pay their first instalment of advance tax on 15th June 2016 for FY 2016-17. (Earlier, first instalment for non-corporate taxpayers or individuals was due on 15th September).
First instalment of Advance Tax is due on 15th June. 15% of your annual tax dues must be paid by this date.
How to calculate the first instalment
Since the amount payable at the first instalment is only 15%, you can simply deposit 15% of your total taxes for FY 2015-16. However, if this financial year is going to be significantly different for you, you can prefer to draw up an estimate for the entire financial year. Estimate your annual income, deduct your expected deductions, and calculate tax payable and then deposit 15% of this amount.
Detailed instruction on how to calculate have been put together here.
Advance tax now also applicable for presumptive business
Those covered under presumptive business were earlier exempt from paying advance tax, however now they must pay the entire advance tax on 15th March of each financial year. If they deposit their dues by 31st March that will be ok too. So presumptive business owners, do not have to pay 1st 2nd or 3rd instalment, they must pay only the last instalment or pay entire advance tax by 31st March.
Our CAs will calculate your advance tax liability so you can pay your dues on time. Drop us an email firstname.lastname@example.org or leave us a comment and we will make sure, you meet your advance tax payment deadline.
How to pay advance tax
ClearTax has put together a guide to help you deposit your taxes – Read here – GUIDE on How to pay advance tax.