Advance Tax

Advance Tax means part payment of one's tax liability before the end of the fiscal year i.e. 31 March. These payments should be payed in advance to the government on your income throughout the year as you earn this Income.

Applicability -If entire tax liability exceeds Rs 10,000 in a financial year.

Senior citizens, persons who are 60 years older or more and do not run a business, are not liable from paying advance tax.

Tax Deducted Source (TDS) - When a person receives salary, Interest, the person paying will subtract TDS before reimbursing the person. If the TDS deducted is higher than the tax due, then the person may not have to pay advance tax.

 In simper sense a salaried employee, need not pay advance tax as employer deducts tax at source (TDS). Advance tax is applicable when an individual has sources of income other than his salary.

Freelancers

 Freelancers almost at all times have advance tax due. This is due to the fact that when freelancers get paid, TDS deducted by the employer paying the freelancer is generally not enough.

Due Dates of payment of Advance Tax (For individuals and corporate taxpayers):

           

On or before 15th June	15% of advance tax
On or before 15th September	45% of advance tax payable
On or before 15th December	75% of advance tax payable
On or before 15th March	Up to 100% of advance tax payable

Filing of AT:

Individuals may pay advance tax using tax payment challans at bank branches authorised by the Income Tax (I-T) Department.  There are 926 branches in India that can accept advance tax payments. Individuals may also pay it online through the I-T department or the National Securities Depository.

Calculation of Advance Tax:

• Estimate Freelancing Income: Sum up the expected income of the person.

• Subtract Expenses: From this income, reduce your expenses which are directly linked to the freelancing work. For e.g. telephone costs, internet connection, rent of your workplace, depreciation on computers, travel expenses, electricity etc.

• Sum up all other Income: include expected income from other sources such as category like House Property, Interest Income, etc.

• If the remaining Tax Due exceeds Rs 10,000, you are required to reimburse Advance Tax as per the due dates mentioned above.

Author: This blog is written by  Ms. Chanchal Sharma, a passionate blogger of Aapka Consultant.

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