Today is the deadline for the last advance tax installment for FY24-25. Taxpayers are required to adhere to the following schedule based on their estimated annual tax liability:
- Installment Schedule:
- 15% of the estimated tax liability is due by June 15.
- 45% of the total liability should be met cumulatively by September 15.
- 75% is required cumulatively by December 15.
- 100% of the estimated liability must be paid by March 15.
- Interest & Penalties:
- Section 234C (Default on Installments):
If there is any delay or shortfall in meeting any of the installment deadlines, interest is charged under Section 234C. This interest is computed at 1% per month (or part of a month) on the difference between the tax liability expected by the installment and the amount actually paid. - Section 234B (Underpayment of Total Liability):
If the total advance tax paid is less than 90% of the total assessed tax liability, interest under Section 234B is levied on the outstanding amount from April 1 until the tax is paid. Notably, if the balance is cleared by March 31, no interest under Section 234B will be applicable since the interest period commences on April 1.
- Section 234C (Default on Installments):
- Exemptions:
Taxpayers whose total tax liability for the financial year is less than ₹10,000 are exempt from the requirement to pay advance tax. However, it remains essential to complete the final tax payment by the due date to avoid any penalties. Maintaining proper documentation is vital for verifying eligibility for this exemption.
Timely payment of advance tax is crucial to avoid additional interest and penalties. Adhering to these schedules and ensuring full compliance not only helps in managing financial obligations efficiently but also minimizes the risk of incurring unnecessary extra interest under Sections 234B and 234C.