Introduction
As we navigate
through the financial year 2023-24, understanding advance tax becomes crucial,
especially with the third instalment due before 15th December 2023. This guide
aims to make the process clear, covering how to calculate, pay, and the
consequences if you miss the boat.
Advance Tax Schedule Simplified
Paying advance tax
involves four instalments, each with a specific due date:
|
Instalment |
Due Date |
|
1st |
Before 15th June 2023 |
|
2nd |
Before 15th September 2023 |
|
3rd |
Before 15th December 2023 |
|
4th |
Before 15th March 2024 |
Some individuals are exempt, like
those without business income or if you're sixty or older.
How to Calculate Your Advance Tax
Here's the
breakdown for each instalment:
|
Due Date |
Amount to Pay |
|
June 15 |
15% of advance tax |
|
Sept 15 |
45%, minus what you paid in June |
|
Dec 15 |
75%, minus what you paid in earlier months |
|
March 15 |
The full amount, minus earlier payments |
Remember, these amounts are
calculated after considering any tax already deducted at source (TDS).
Example: Mr. Kumar's Story
Let's take Mr. Kumar,
estimating his income for 2023-24:
·
Business Income: Rs. 5,95,000
·
Income from house property: Rs. 23,000
·
Interest on deposit (TDS Rs.1,200): Rs. 12,000
·
Dividend income (TDS Rs. 4,000): Rs. 40,000
·
Other income (TDS Rs. 3,000): Rs. 30,000
After all calculations, his advance
tax liability is Rs. 36,000.
What Happens If You Miss a Payment?
If you pay less
than you should in any instalment, you'll be charged interest at 12% on the
remaining amount. It's a good idea to avoid this!
Section 234B: The Interest Part
Section 234B says
if you don't pay at least 90% of what you should, you'll face a 1% monthly
interest charge from April 1st until your total income is figured out.
In a Nutshell
The 15th December 2023 deadline for the third instalment is crucial. Understanding the process, paying on time, and avoiding interest charges is not just a rule, but a smart financial move. Failing to meet these advance tax obligations might lead to extra costs under section 234B. So, keep track of your income, stick to deadlines, and pay your advance tax to stay on the right side of the law and your finance
