Understanding Advance Tax for Individuals

Advance tax is a method of paying income tax in installments during the financial year itself, rather than paying the entire amount at the end of the year. This system applies to individuals and other taxpayers if their estimated tax liability for the year exceeds a certain limit (currently ₹10,000 in India). The government mandates specific due dates and minimum percentages of the total estimated tax liability that must be paid by those dates.

Advance Tax Payment Schedule for Individuals

For individuals who are not covered by the presumptive taxation scheme under section 44AD or 44ADA, the advance tax is payable in four installments throughout the financial year. Each installment has a specific due date and a cumulative percentage of the total tax liability that should have been paid by that date.

The due dates and the cumulative percentages for advance tax payments by individuals are as follows:

The question specifically asks about the percentage of advance tax that needs to be paid by 15th June by an individual liable to pay advance tax. Looking at the payment schedule, the first installment is due on or before 15th June.

Advance Tax Percentage by June 15th

According to the rules, by the due date of 15th June, an individual who is required to pay advance tax must have paid a minimum of 15% of their total estimated advance tax liability for the financial year. This is the first milestone in the advance tax payment schedule.

Therefore, the percentage of advance tax that needs to be paid by 15th June is 15%.

Revision Table: Key Advance Tax Dates

Let's quickly recap the crucial dates for advance tax payments by individuals (other than those opting for presumptive taxation under 44AD/44ADA):

Additional Information on Advance Tax

Understanding advance tax involves a few more points:

• Who must pay: Generally, individuals whose tax liability for the financial year is ₹10,000 or more after deducting TDS (Tax Deducted at Source) are liable to pay advance tax. However, resident senior citizens (aged 60 or more) who do not have income from business or profession are exempt from paying advance tax.
• Calculation: Advance tax is calculated on the estimated income for the entire financial year. Any TDS already deducted is subtracted from the total estimated tax liability to arrive at the advance tax payable.
• Interest: Failure to pay advance tax, or paying less than the required percentage by the due dates, can attract interest under sections 234B and 234C of the Income Tax Act. Section 234C deals with interest for deferment of advance tax installments, and Section 234B deals with interest for short or non-payment of advance tax by the end of the financial year.
• Presumptive Taxation: Individuals opting for presumptive taxation under section 44AD or 44ADA have a different advance tax schedule. They need to pay the entire advance tax liability in a single installment by 15th March of the financial year.

Knowing the correct advance tax payment dates and percentages is essential for timely tax compliance and avoiding penalties.