Taxpayer Alert! Pay your advance tax by March 15 or face penalty

Taxpayer Alert! Pay your advance tax by March 15 or face penalty

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Are you a tax payer and haven’t paid the final instalment of your advance tax yet? If that is the case, then it is time to hurry up as you need to pay the 4th instalment of your advance tax latest by March 15, 2020, or be prepared to face penalty. In a message sent to taxpayers on Wednesday, the Income Tax Department said, “Attention Taxpayers! 15.03.2020 is last date for paying your fourth and final instalment of Advance Tax. Non/short payment is liable to penal interest.”

Thus, if you don’t want to pay any penal interest or face any penalty as per the Income Tax Act, then you must pay the unpaid advance tax by the due date.

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What is Advance Tax?

Apart from TDS (Tax Deducted at Source), Advance Tax is a mechanism through which the government collects income tax revenue from the concerned taxpayers on a regular (quarterly) basis. This mechanism is used particularly in case of those incomes which are not subject to TDS or where the rate of Tax Deducted at Source is less than the rate at which one’s income is taxed.

How is Advance Tax Calculated & Paid

Advance Tax is calculated on the basis of a taxpayer’s expected tax liability of the year, and is paid in instalments as mentioned below:

(a) In case of all assessees (other than the eligible assessees as referred to in section 44AD and 44ADA) :

i) Up to 15% – On or before June 15

ii) Up to 45% – On or before September 15

iii) Up to 75% – On or before December 15

iv) Up to 100% –On or before March 15

(b) In case of eligible assessee as referred to in section 44AD and 44ADA:

100% – On or before March 15

It may, however, be noted that any tax paid on or before March 31 will also be treated as advance tax paid during the same financial year, and the deposit of this tax is made through challan ITNS 280 by ticking the relevant column, i.e., Advance Tax.

Penalty

If a taxpayer is liable to pay advance tax, but fails to pay the required tax during the year or pays only a part of it, then he/she is liable to pay penal interest for default of advance tax.

“Fourth and final installment of advance tax is required to be deposited on or before 15th March, 2020 for the financial year 2019-20. The advance tax is to be paid @ 100% of the total estimated tax liability as reduced by the amount of tax deducted at source and advance tax already paid. Failure to pay the advance tax would attract interest @ 1% p.m. In case of failure, the Income Tax Department can pass an order requiring assessee to pay advance tax and can also attach one’s bank account to recover the same,” says CA Abhishek Soni, Founder, tax2win.in.

Source:- financialexpress

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