Understanding Advance Tax: Who Should Pay and How to Calculate It

Many taxpayers are surprised when they receive an unexpected tax demand at the end of the financial year. This usually happens because they are unaware of advance tax requirements. Advance tax is simply the process of paying your income tax in installments throughout the year, rather than waiting until the year-end.

As an experienced CA firm, we’ve prepared a simple guide to help you understand who should pay advance tax, when it is due, and how to calculate it.

Who Should Pay Advance Tax?

Advance tax applies to:

• Individuals, freelancers, and professionals with tax liability of more than ₹10,000 in a financial year.
• Businesses earning taxable income.
• Salaried individuals with significant income from sources other than salary (like rent, interest, or capital gains).

However, senior citizens (aged 60 or above) without business income are exempt.

If you’re unsure whether you fall under this category, consulting a CA in Jaipur can give you clarity.

Advance Tax Payment Deadlines

Advance tax is paid in four installments during the year:

• 15th June → 15% of total liability
• 15th September → 45% of total liability
• 15th December → 75% of total liability
• 15th March → 100% of total liability

Missing these deadlines can lead to interest under Sections 234B and 234C.

How to Calculate Advance Tax?

1. Estimate your total income for the financial year (salary, business, rental, capital gains, etc.).
2. Deduct eligible exemptions and deductions (HRA, 80C, 80D, etc.).
3. Apply the applicable income tax slab rates.
4. Subtract TDS already deducted.
5. If the remaining tax liability exceeds ₹10,000, you must pay advance tax.

Why Advance Tax Matters

• Avoids last-minute tax burden.
• Prevents interest and penalty charges.
• Helps maintain smoother cash flow planning for businesses.

A professional CA firm can assist in accurate income estimation, timely calculations, and advance tax filing to ensure compliance.

Conclusion

Advance tax is not just a legal requirement—it’s a smart way to spread your tax payments and stay financially organized. By understanding who needs to pay and how to calculate it, you can save yourself from unnecessary penalties.

If you’re confused about your liability, seek expert guidance from a trusted CA in Jaipur. With the right CA firm by your side, you’ll never have to worry about missing deadlines or paying avoidable interest.