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ADVANCE TAX

Advance tax is one of the major tools used by the Government to collect tax from the assessees in all over India. This prepaid form of tax is designed in such a way that an assessee is made to pay tax to the Government in a €˜Pay as You Earn Scheme€™. It is obligatory to pay advance tax in every case where the estimated tax payable (after taking into account tax deducted at source) is Rs.10000 or more.
            
How to pay advance tax

The employee must estimate his total income from all sources and calculate tax payable on such income. From the tax so calculated, the tax to be deducted at source by the employer on the income under €˜salaries€™ should be deducted. The balance should be paid in three installments on or before the following due dates:

Due date

Amount to be paid

15th September
15th December
15th March

30% of tax
60% of tax, less amount already paid
100% of tax, less amount already paid

It has been clarified that any payment made on or before 31st march will be treated as advance tax.
If the last day for payment of any installment of advance tax is a day on which the receiving bank is closed, the assessee can make the payment on the immediately following working day, and in such cases, the mandatory interest leviable under section 234B and 234C would not be charged. At every stage of payment, it is advisable to recomputed the estimated income, if necessary, and to revise the amount payable, so as to work out to the requisite percentage.

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