Liability For Payment Of Advance Tax

Understanding Liability for Payment of Advance Tax

1. Individuals:

Resident individuals, including salaried employees, freelancers, and self-employed professionals, must pay advance tax if their total tax liability, excluding TDS, exceeds Rs. 10,000 in a financial year.

2. Senior Citizens (Individuals aged 60 years or above):

Senior citizens who do not have income from business or profession are exempt from paying advance tax, irrespective of the amount of tax liability.

3. Businesses and Professionals:

Businesses, such as partnerships, LLPs, companies, and others involved in trade or profession, must pay advance tax if their total tax liability exceeds Rs. 10,000 in a financial year.

4. Companies:

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

5. Other Entities:

Other entities such as Hindu Undivided Families (HUFs), trusts, associations of persons (AOPs), and body of individuals (BOIs) are also liable to pay advance tax if their total tax liability exceeds Rs. 10,000 in a financial year.

6. Income Sources:

The liability for payment of advance tax arises from various income sources, including salaries, business profits, professional fees, rental income, capital gains, interest, dividends, and other taxable income sources.

7. Due Dates and Installments:

Tax authorities specify due dates for advance tax payments, typically in quarterly installments throughout the financial year. In India, for example, advance tax payments are due on specific dates such as June 15th, September 15th, December 15th, and March 15th.

8. Penalties for Non-Compliance:

Failure to pay advance tax or underpayment of advance tax may attract penalties and interest charges imposed by tax authorities. 

It's essential for taxpayers to comply with advance tax payment requirements to avoid penalties and ensure timely fulfillment of tax obligations.