As we move towards the end of the financial year 2022-23, it’s time to think about your tax liability and pay your last instalment of advance income tax. But what happens if you miss the due date or fail to pay the full amount? Let’s explore your tax liabilities and why it’s important to pay your tax on time.
What is Advance Income Tax?
It is the tax amount that individuals should pay in instalments throughout the financial year instead of a lump sum at the end of the year. In case your estimated tax liability for the year is ₹10,000 or more, you must pay your tax in advance, as per section 208 of the Income Tax Act, 1961.
Now, what happens if you don’t pay your advance tax on time or miss any of the instalments? You’ll be liable to pay interest of 3% per quarter for the first 3 quarters and 1% for the final quarter. Additionally, if the advance tax paid by you is less than 90% of the total tax payable, you’ll be liable to pay additional interest from April at the rate of 1% per month on the shortfall of advance tax.
But that’s not all. Failing to pay advance tax can also lead to penalties and even prosecution under the Income Tax Act. This is not something you want to mess with, as the penalties can be hefty, and the legal consequences can be severe.
So, what can you do to avoid defaulting on your tax liability?
- Firstly, make sure you pay your advance tax on time and in full.
- The due dates for advance tax payment are 15th June, 15th September, 15th December, and 15th March for the first, second, third, and fourth instalments, respectively.
- Set reminders or use online tax payment services to ensure you never miss a deadline.
In conclusion, paying your advance income tax on time is crucial to avoid penalties, interest, and even prosecution. Don’t miss the tax train, and stay ahead of the game by being a responsible taxpayer. Remember, it’s not just about following the law but also about contributing to the development of our nation.
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