Payment of Advance Tax 3rd installment: Taxpayers can pay advance tax online through IT department website or offline in banks.
Payment of Advance Tax: Failure to pay installments of advance tax on time may lead to penalty under Section 234B.
Meeting tax obligations on time is crucial to avoid penalties and ensure compliance with the law. With the financial year well under way, taxpayers are requested to stay updated on their advance tax commitments for Assessment Year (AY) 2025-26. The third tranche, which covers a significant portion of the tax liability, is an important milestone in the process.
Who needs to pay advance tax?
Advance tax It is a method of ensuring timely payment of income tax by individuals, businesses and corporations whose annual tax liability exceeds Rs.10,000.
Advance tax is applicable:
- Salaried individuals who have significant non-salary income (such as rent, capital gains, or interest income).
- Self Employed Professionals and Business Persons.
- Corporates.
Senior citizens (age 60 and above) who have no income from any business or profession are exempted from paying advance tax.
Last date for payment of advance tax
Taxpayers across the country are reminded that the third installment of advance tax for Assessment Year (AY) 2025-26 is due on December 15, 2024. For this installment, taxpayers have to pay 75% of their total tax liability for the financial year (FY). 2024-25 overall.
Advance Tax Payment Dates
Advance Tax Payment Schedule
The Income Tax Department mandates payment of advance tax in four installments throughout the financial year. Below is the schedule:
- 1st installment: 15% of total tax due till 15 June 2024
- Second Installment: 45% of total tax liability (gross) up to 15 September 2024
- 3rd Installment: 75% of total tax liability (gross) up to 15 December 2024
- 4th installment: 100% of total tax liability (gross) up to 15 March 2025
How to pay advance tax?
Taxpayers can pay advance tax online through the official website of the Income Tax Department or offline at designated bank branches. Accurate assessment of tax liability is essential to avoid penalties or overpayments. Taxpayers must consider all sources of income, deductions and exemptions when making payments.
Importance of timely payment
Timely payment of advance tax ensures compliance with tax laws and avoids unnecessary penalties or interest charges. This allows the government to maintain a steady flow of revenue throughout the year, ensuring efficient fiscal management.
Taxpayers are advised to review their finances and make the necessary calculations to meet the December 15 deadline for the third installment. For further guidance, consult a tax professional or refer to the official resources of the Income Tax Department.
Implications of Missing Deadlines
Failure to pay installments of advance tax on time may lead to penalty under Section 234B (for default in payment) and Section 234C (for delay of installments) of the Income Tax Act. These penalties include interest charges on unpaid amounts, which can increase the taxpayer’s overall liability.