Advance Tax: December 15 Is The Last Date For Payment; Here's What Happens When You Miss It

Advance tax is a mechanism through which individuals and organizations make payments towards their taxes spread throughout the year, as opposed to a one-time payment at the close of the fiscal year. In terms of Section 208 of the Income-tax Act, 1961, every assessee shall pay advance tax if the aggregate of TDS as well as TCS stands more than Rs 10,000.

Advance tax is generally held to be applicable only to businesses and corporations. However, it applies to salaried employees as well as all such individuals who may have income that is not collected under TDS, be it the interest earned on fixed deposits, rentals earned, or income through capital gains. Note that advance tax does not apply to a senior citizen residence who earns income not from profession or business.

The due date for advance tax payment for the third instalment of the financial year 2024-25 falls on December 15. It demands 75 per cent of tax liability to be paid. In case it is not paid on or before the due date, the interest charges will attract penalties from the taxpayers' end.

Even though this year the due date coincides with a Sunday, it is possible to pay on the next Monday. It is not advisable to wait for the last day since technical faults or errors in calculation can lead to non-compliance. It is always good to do it earlier to avoid unnecessary complications and ensure peace of mind.

How To Pay Advance Tax Online

It has now so much become easy to pay an advance tax through the website of the income tax department. First of all, if you haven't registered log on to www.incometax.gov.in and then log in through your PAN, next move to the 'Quick Links' and click the 'e-pay tax' option.

Once you have confirmed your PAN and entered the OTP, then select the assessment year, which would be 2025-26 for the financial year 2024-25 and also select 'Advance Tax (100)' as the pay type. Fill in all the required details and make the payment through any mode. Be careful not to click on the wrong assessment year or category so that it won't delay or even get delayed in processing.

What If You Miss a Deadline?

Failure to pay advance tax on time results in penalties under Sections 234B and 234C of the Income-tax Act. Under the law, there is the simple interest of 1 per cent per month on the amount unpaid or underpaid from the due date until the amount is paid.

The penalties are also charged if the advance tax paid is less than the specified percentages by certain dates. For example, if you have paid less than 75 per cent of your liability by December 15, then interest will be charged on the deficiency. These penalties increase your liability and also affect your history of tax compliance, which might influence future financial transactions or loans.

Differences Between Small Business Owners and Large Businesses

For those who are self-employed, such as professionals who have adopted the presumptive taxation scheme, rules vary. One can pay all their advance tax liability by 15th March. It is an act of recognition that small businesspeople often face difficulties in estimating at the start of the financial year their incomes accurately.

Advance tax payments spread the tax burden throughout the year and avoid the financial strain of a lump sum payment at the end. It also helps salaried employees account for other sources of income that employers might not account for when deducting TDS.

Now is the time to calculate your liabilities correctly and pay it because the third instalment of advance tax for the financial year 2024-25 falls on December 15. It is not only important to remain compliant but also because non-compliance will result in penalties and a negative reflection on your financial discipline, which might come in handy when interacting with the tax authorities in the future.