Condition Of Liability To Pay Advance Tax

Understanding Advance Tax Liability in India

1. Threshold Limit:

Resident individuals, HUFs, and taxpayers (excluding eligible senior citizens) must pay advance tax if their total tax liability, after deducting TDS, is Rs. 10,000 or more for the financial year.

2. Business Income:

Taxpayers who have income from business or profession are required to pay advance tax regardless of the threshold limit. 

This applies to all types of business entities, including sole proprietorships, partnerships, limited liability partnerships (LLPs), and companies.

3. Capital Gains:

Taxpayers who have significant capital gains, such as from the sale of property, stocks, or other capital assets, may also be liable to pay advance tax if the total tax liability on such gains exceeds the threshold limit.

4. Income from Other Sources:

Income from other sources, such as interest, dividends, rental income, royalties, or any other taxable income, is considered when determining the total tax liability for the financial year.

5. Due Dates and Installments:

Taxpayers liable to pay advance tax must pay it in installments as per the due dates specified by the Income Tax Department. 

These due dates are typically spread across the financial year, with quarterly deadlines.

6. Senior Citizens:

Senior citizens (individuals aged 60 years or above) who do not have income from business or profession are exempt from the requirement of paying advance tax, irrespective of the amount of tax liability.

7. Companies:

Companies, including domestic companies, foreign companies, private limited companies, and public limited companies, are required to pay advance tax regardless of the amount of tax liability.