Thread by @CAYogesh4u

Thread 🧵on Advance Tax.
Applicability, Consequences of Non Payment, Calculations, How to Make Payment etc.

#advancetax
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Q. What is an advance tax?

In simple term paying taxes in "Installments" rather than in lump sum while filing ITR. Tax amount paid before 31st March of respective FY is considered as an advance tax.

Tax is to be paid before certain due dates given by @IncomeTaxIndia

Q. Applicability of Advance Tax ?

Advance tax applicable to all assesses whose tax liability in a year exceeds Rs.10,000

Assessees include Salaried people, Businesses, Freelancers, Traders etc. This means all assesses.

Q. Non-Applicability of Advance Tax?

👉Individual Tax payer who is "Resident Senior Citizen" and does not have any income from Business or Profession.

👉Assessee whose tax liability is less than 10K in FY.

Q. Advance Tax applicable to NRI's?

Absolutely Yes. Advance Tax applicable to NRI's whose tax liability in year exceeds 10K with respect to Indian Income.

No exemption to NRI Senior Citizen. #NRI

Q. Why you should pay Advance Tax ?

👉To save on interest u/s 234B/C on Tax while filing your ITR.

👉To better funds management. You can pay in installments rather than lump sum while filing ITR.

#IncomeTaxReturns

Q. Consequences of Non Payment of Advance Tax?

Non-payment of advance tax will attract interest at the rate of 1% p.m. u/s 234B & 234C of Income Tax Act, 1961. Detailed calculations in next tweet.

This will be payable at the time of ITR filing.
#itrfiling

Q. How interest calculated on non-payment of Advance Tax?

Refer Image for better understanding 👇👇

Q. What are due dates for Advance Tax Payment? How much to pay on each installments?

Taxpayers who opted for Presumptive Scheme u/s 44AD, 44ADA i.e Businesses or Professionals are liable to pay the entire amount of advance tax in one installment on or before 15th March.
Refer 👇

Taxpayers who have not opted only for Presumptive Scheme of taxation then,
they have to pay advance tax in 4 installments like mentioned in above image 👆

#taxation

Q. How to calculate Advance Tax payable?

Follow these 4 simple steps

1. Estimate your income to be earned during FY. Income from interest, professional income, capital gains, rent, etc. have to be clubbed together.

2. Estimate the expenses related to the estimated income in FY.

3. Estimate the deductions you will claim under Chapter VIA. ELSS, LIC, PPF, NPS, Mediclaim etc.

4. Calculate the total tax liability

You can use various calculators provided by @IncomeTaxIndia as well.

While calculating the tax liability make sure you consider:

👉The slab rate applicable to you
👉Tax rebate u/s 87A
👉The TDS to be deducted on your income

Divide this tax liability in 4 Installments of 15%, 45%, 75% & 100% according to their due dates.

Q. How to pay Advance Tax ?

You can pay through NSDL website- shorturl.at/nry28
by selecting CHALLAN NO./ITNS 280 >> Advance Tax (100)

Or directly from Income Tax website- shorturl.at/cgjvz

Make sure you select correct PAN, AY, Type of Payment, Tax Applicable.

How to check paid Advance Tax ?

Challan will be generated after payment of advance tax online. Keep it for your records.

Additionally, you can check in Form 26AS which is available on income tax portal. Generally, after 5-6 days it will start reflecting in 26AS.

Thread ends. 🙏

I hope you must have got basic idea about Advance Tax. Please drop your questions in comments and retweet for maximum reach.

Thanks.