There are only two days left for the assessee to pay the second installment of the advance tax towards the FY 2023-24 since the last date will lapse on 15th September. Penalties shall be imposed under sections 234B and 243C if the assessee misses the payment.
It's important to highlight that advance tax is settled in the same fiscal year in which income is generated, and this payment is divided into four installments. Specifically, 15 percent of the total tax obligation is due by June 15, followed by a 45 percent payment by September 14, which already includes the June installment.
Moving on to December 15, the total liability stands at 75 percent, encompassing both the June and September installments. Finally, by March 15, taxpayers are obligated to pay the full 100 percent of their tax, as stipulated by income tax legislation.
Taxpayer Eligibility
Any taxpayer, including individuals with salaried income, whose total tax liability for the fiscal year, after accounting as reduced for tax deducted or collected at the source, amounts to Rs 10,000 or more. Additionally, individuals with income sources beyond their salary, such as rental income, capital gains, fixed deposits, lottery winnings, and others, are obligated to remit advance tax payments.
Advance Tax Exemptions
There is no liability to pay the advance tax for the resident senior citizens (an individual of the age of 60 years or above) who do not have any income via business or profession. Indeed the individual who does not have income other than the salary is not required to file the advance tax installments since the employers deduct the applicable tax via the monthly salary.
Electronic Payment Mode
Electronic payment is obligatory for both corporations and individuals whose financial records need to undergo an audit as mandated by Section 44AB of the Income Tax Act, 1961. Section 44AB of the Income Tax Act outlines the regulations concerning tax audits in the Income Tax audit, which involves a thorough review of a taxpayer's financial records.
Furthermore, electronic payment is advantageous for all other taxpayers since it guarantees accurate crediting of payments.
Penalty For Default
Any shortfall or failure to make timely payments of the advance tax installments will result in an additional interest obligation for the taxpayer. Section 234C mandates a 1 percent interest charge for each month of delay in payment on the amount by which the installment falls short. There is a permissible variance of up to 10 percent on the total Income Tax liability.
In practical terms, if taxpayers remit less than 90 percent of the assessed tax by the deadline, Section 234B stipulates that they must pay 1 percent interest for each month throughout the assessment year during which the deficiency and delay persist. It's essential to note that even a portion of a month is considered a full month when calculating interest.
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