10 Mar , 2021 By : kanchan Joshi
The deadline for filing advance tax is approaching. Any person whose estimated tax liability for the year is Rs10,000 or more is required to pay advance tax. The advance tax has to be paid in four instalments in the financial year itself. The last date for paying the fourth instalment of advance tax is 15 March.
Let’s understand how to estimate advance tax and the penalties in case you don’t pay your advance tax in time.
“A taxpayer should first estimate his current income and income-tax thereon shall be calculated at the rates in force in the financial year. Thereafter the estimated tax deducted or collected at source will be deducted and the balance tax payable will be used to compute the advance tax liability," said Vivek Jalan, partner, Tax Connect Advisory Services LLP, a Chartered accountancy firm.
The taxpayer will be liable for interest under Section 234B and 234C for default in payment of advance tax.
Interest under Section 234B is levied if the taxpayer has not deposited advance tax or if the advance tax deposited is less than 90% of the total tax liability. The taxpayer will be liable for interest under Section 234B at 1% per month or part of the month from April till the date of payment of tax.
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