Advance Tax and How to Avoid Interest on Advance Tax (Part-2)

Advance Tax and How to Avoid Interest on Advance Tax

By Dr. Lalit Kumar Setia |  @drlalitsetia  |  drlalitsetia@gmail.com  | Created February 24, 2018 | Updated March 27, 2019

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There are four due dates, let us understand how interest will be computed.

(a) 15^th June: 

It is required to pay 15% of the advance tax up to 15^th June of the financial year and if less than 15% of tax payable is paid. In 3^rd month of financial year i.e. June, an individual should compute estimated income from all sources i.e. Salary, House Property, Business or Profession, Capital Gains, and Other Income. Deduct the exemptions and deductions, he or she would be entitled to i.e. from 80C to 80U. 

On the amount of taxable total income, tax slabs should be applied to compute the amount of tax liability including cess and surcharge (if any). 

15% of the tax liability should be paid up to 15^th June of the financial year either in form of TDS or Advance Tax; otherwise simple interest @1% per month will be charged for 3 months i.e. from 15^th June to 15^th September of the financial year.

(ii) 15^th September: 

Upto 15^th September, 45% of estimated tax liability should be paid in order to avoid the payment of interest @1% per month for 3 months i.e. from 15^th September to 15^th December of the financial year.

(iii) 15^th December:  

Upto 15^th December, 75% of estimated tax liability should be paid in order to avoid the payment of interest @1% per month for 3 months i.e. from 15^th December to 15^th March of the financial year.

Continued......

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