How To File Advance Tax By The Deadline Of December 15? Here’s A Step-by-step Guide

As the clock ticks down to December 15, taxpayers are reminded that the deadline for paying the third instalment of advance tax is just around the corner. This obligation, often overlooked by salaried individuals relying on TDS, is a mandatory requirement for anyone with an estimated tax liability of Rs 10,000 or more for the financial year under the Income Tax Act of 1961.

Advance tax, paid in four instalments, is a vital financial responsibility that ensures timely contributions towards one's tax liability. The deadlines for these instalments are strategically spread throughout the fiscal year: 15% by June 15, 45% by September 14, 75% by December 15, and the total 100% must be settled by March 15 of the financial year. Failure to meet these quarterly deadlines can result in penalties, emphasizing the importance of staying on top of advance tax payments.

Non-payment of advance tax incurs a penalty in the form of interest, set at a rate of 1% per month for the shortfall. This penalty applies not only to non-payment but also to any underpayment according to the scheduled instalments. Taxpayers are urged to act promptly to avoid financial repercussions.

1. Senior Citizen Exemption

For senior citizens aged 60 or above, devoid of income from business or profession, there is a welcome exemption from advance tax liabilities. This offers a reprieve for those in the senior demographic, acknowledging their unique financial circumstances.

2. Presumptive Taxation Scheme

Opting for a presumptive taxation scheme (except Section 44AE) provides an alternative approach. Taxpayers under this scheme are not obligated to pay advance tax in four instalments; instead, they can settle the entire amount on or before March 15 of the financial year. This flexibility can be advantageous for those seeking a simplified approach to tax compliance.

3. Interest Exemptions

Certain exemptions apply to the interest on the shortfall in payment of advance tax instalments. This is particularly relevant when the shortfall is due to the underestimation or failure to estimate specific sources of income, including capital gains, winnings from lotteries or games, dividend income, and business income accruing for the first time. Importantly, the amount of tax payable on such income must be paid by March 31 of the financial year to qualify for these exemptions.

As the December 15 deadline looms, taxpayers are urged to review their financial situations and ensure compliance with advance tax obligations. The consequences of non-compliance can be significant, making it essential for individuals to explore available exemptions and schemes that may alleviate their tax burdens.