The tax department has mandated the payment of Income tax in case the overall tax liability for the prescribed financial year exceeds Rs. 10000 as advance over 4 installment spread after an equal time gap to reduce the burden of a taxpayer at one one-go.
Here the calculation is done on assumption by taking into account estimated income earnings for the year. It is to be noted that while for an employee, employer makes up for the advance tax payments via deduction of the TDS amount. Nonetheless if the same category of taxpayer have some other earnings besides salary income then advance tax needs to be serviced in lieu of the same without default, else be ready to brace penalty implications.
Also, some other professionals including the likes of doctors, lawyers whose grosss receipts in a year are less than Rs. 2 crore on an annual basis, they need not compulsorily pay the advance tax payment. But the same has to be meted out before March 15 of the respective financial year.
Calculation of advance tax
The estimated levels of income for the respective financial year can be taken to arrive at the gross taxable income after providing for deductions allowed and the concern can then compute tax liability at just the taxation slab prevailing during that time. A person can for this person also take into account his previous years taxable income to arrive at a fair level of tax which he needs to pay out. Any shortfall from the actual could be then paid towards the end of the financial year.