Advance Tax Payment Due Dates, Rates & Computation

Do you know that we need to make advance tax payment otherwise the tax is paid with interest. Here I’ve covered most of the details of advance tax including advance tax due dates , calculation, challan and rates.
What is advance tax payment?
Advance tax means tax payment of tax in Advance before the year end withing advance tax due dates. It is paid in accordance with provision of Income Tax Act 1961. The tax burden of tax payer get reduced by paying installment of advance tax periodically in a year instead of paying total tax at the end of the year.
Who is liable to pay Advance tax?
All persons are liable to pay advance tax if the total tax payable during the year is 10000 or more.
Who are exempted from advance tax payment ?

1. Persons whose total tax payable is less than Rs. 10,000 in a year
2. Resident Senior Citizen who is of the age of 60 years or above, and does not have any income chargeable under the head “Profits and Gains of Business or Profession”.
3. A taxpayer, being individual, HUF or Firm but not LLP, opting for presumptive taxation scheme u/s 44AD

How is advance tax computed ?
Advance tax is computed on the estimated total income. The taxpayer has to predict his total income at the time of payment of advance tax. On such estimated total income, normal tax rates are applied to find out the tax liability.
The taxpayer can reduce estimated allowable expenditures, rebates, deductions etc from the estimated total income. Further he can also take claim of TDS deducted, if any.
For example M/s ABC Ltd. estimates his total sales Rs. 4 Lac for the year and estimated the expenditure Rs. 3.60 Lac. Then his income would be Rs. 40,000. M/s ABC Ltd. further estimates his income from other sources will be Rs. 20,000. Then the total estimated income is Rs. 60,000. Then the total tax liability is Rs. 60,000 x 30.9 % = 18,540/- Suppose somebody (payer of Income) has already deducted TDS of Rs. 10,000 on his income. Then the net estimated tax liability is Rs. 8,540/-.
The estimated total income is  calculated on the basis of past years. Suppose if our sales for the 1^st quarter is 3 lac, then we can predict that the total sales for the whole year would be around 12 lac. And based on the net profit ratio of last year we can predict the net profit of this year.
The assessing officer is also empowered u/s 210(3) to pass order and issue notice of demand requiring an assessee to pay advance tax for financial year.
For the purpose of computation of advance tax the assessing officer may adopt the higher of the following.

1. The total income of the latest previous year in the respect of which the assessee has been assessed under regular assessment .
2. The total income returned by the assessee in any return of income for any previous subsequent to the previous year for which regular assessment has been made. Sec 209(1).

How advance tax payment is made?
Advance tax is paid in installment in accordance with section 211. Every asseessee need to pay 100% of advance tax by 15^th march of the year. The payment can be made online or offline (through bank).
What are the advance tax forms or challan  ?
Challan no. 280 is used of payment of advance tax for both online and offline payment.

What are the advance tax due dates and rates ?

Advance tax is paid in installments in different dates.
Advance tax due dates is divided for two catogeries-

The last installment paid by Assessee on or before 15^th March, but he can pay it by 31^st March, it also treats as Advance tax. Where the Assessee  does not pay any installment by the due date, he shall be deemed to be an Assessee in Default.
How to claim credit of advance tax?
Any advance tax paid is adjusted with the total tax liability and credit shall be given to the asseessee in the regular assessment Sec 219. For example- Mr. A paid Rs. 15000 as advance tax and he computed his final ax liability at year end Rs. 40000. So, now he has to pay only Rs. 25000 as self assessment tax.
How to calculate interest for defaults in payment of advance tax u/s 234B?

Where in any financial year, an asseessee who is liable to pay advance tax has failed to pay such tax or the advance tax paid by the assessee is less than 90% of the assessed tax, the assessee shall be liable to pay interest u/s 234B.
In such cases, assessee shall pay simple interest @ 1% per month or part thereof from 1^st day of April following the financial year.
The period for which the interest is payable would be the period from the 1^st day of April next following such financial year to the date of determination of total income u/s 143(1). However if the regular assessment is completed, then interest is chargeable up to the date of regular assessment.
“Assessed tax” means

• For the purpose of computing interest payable u/s 140A, the tax on the total income as declared in the return;
• In any other case, the tax on total income as determined u/s 143(1) or on regular assessment as reduced by the amount of : (i) TDS or TCS (ii) relief from double taxation u/s 90 , 90A or allowed u/s 115JD, on any income which is taken into account while computing such total income.

Regular assessment means
Where in relation to an assessment year, an assessment is made for the first time u/s 147 or u/s 153A .
What is the interest for deferment of advance tax  u/s 234C?
As we have seen in section 234B interest is paid for default in payment of advance tax i.e failed to pay up to 90% of the total advance tax during the year. But in case of 234C we pay interest for not paying the specified percentage of advance tax installments within due dates.
In the case of non corporate and corporate assessees computation of interest u/s 234C shall be as follows:
Step 1: Compute total tax payable
Step 2: Computation of shortfall in installments.

Step 3: Computation of interest @ 1% on the shortfall

If the shortfall in the payment of tax due on the returned income is on account of under estimation or failure to estimate :

1. Capital Gains or
2. Winning form lotteries, crossword puzzles, races ( including horse races) card games and any other activity of gambling, betting etc.,

and if the assessee had paid the whole amount of tax payable in respect of the above mentioned income as part of the remaining installments of advance tax which are due or where no such installments are due, by 31^st march of the financial year, no interest u/s 234C shall be leviable in respect of such shortfall.