15th September is the due date to pay the 2nd advance tax instalment.
One thing that most trader-investors tend to overlook is keeping track of their taxes. Most of us think that tax filing and payment happen just once a year, but in reality, taxes need to be paid throughout the year as you earn income. For some incomes, the tax is deducted in the form of TDS whereas for others like capital gains and business income, you need to pay advance tax.
This is why knowing about advance tax becomes very important, especially for those who participate in the stock markets.
What is advance tax?
As the name suggests, it means paying taxes in advance by estimating your yearly tax liability. These payments are split into four instalments, one for each quarter of the year.
| Due Date | Advance Tax Payment |
|---|---|
| On or before 15th June | At least 15% of tax liability |
| On or before 15th September | At least 45% of tax liability |
| On or before 15th December | At least 75% of tax liability |
| On or before 15th March | 100% of tax liability |
Who is liable to pay?
Advance tax is applicable if the estimated tax liability for the year is more than ₹10,000.
However, there are a few exceptions,
- Senior citizens (above 60 years) who do not have income from business or profession are exempt from paying advance tax.
- For taxpayers who have opted for the Presumptive Taxation Scheme under sections 44AD & 44ADA, the advance tax can be paid in one instalment on or before 15 March of the relevant year.
- Salaried individuals covered under the TDS net are usually not required to pay advance tax. However, if you have switched jobs, or earned additional income from sources like capital gains, rent, or interest, advance tax may be applicable.
What happens if you don’t pay advance tax?
If you fail to make the advance tax payments, an interest penalty of 1% per month will be levied on the unpaid amount till the time you make the tax payment.
How do I pay advance tax?
We’ve covered more details in this video: Calculate and pay advance tax
If you have any questions related to advance taxes, you can ask them in this thread.