You do not have to wait for the financial year to end to deposit the tax. Rather, the tax has to be deposited before the end of every quarter. Since income tax has to be filled on earnings, that is why it is known as “Pay as you earn” scheme. If you are not a salaried person then you are not liable for TDS but if your annual tax liability is Rs. 10,000 or more then you have to pay advance tax. In such a situation, if income tax liability is more than 10 thousand rupees on your earnings annually, then you have to file it every quarter as Advance Tax.

Advance Tax has to be filled under three situations. 

If you are a salaried person but getting higher interest, capital gains, and higher rent.

If you are a freelancer and your income tax liability is more than Rs. 10,000.

If you are a businessman and your income tax is more than Rs. 10,000.

Note:- If you are a businessman and opts for the presumptive scheme where business income is assumed at 8% of the turnover of fewer than 2 crores are exempt from advance tax for FY 2017-2018   

Penalty on not depositing the advance Tax in Time

If you do not submit a portion of Advance Tax on due dates according to the schedule given above, then you have to pay Late Fee/penalty. It is charged under three rules.

  • Interest for defaults in furnishing return of income under Section 234A

Where the return of income for any assessment year is furnished after the due date or is not furnished, the assessee shall be liable to pay simple interest @1% percent for every month or part of a month comprised in the period commencing on the date.

  • Interest for defaults in payment of advance tax under section 234B

If the taxpayer will default in the payment of Advance tax then interest under section 234B of Income Tax Act will be levied upon those taxpayers. If no Advance tax has been paid for the year or at least 90% of the Advance tax has to be paid by Assesse, where the tax payable is Rs 10,000 or more, then the interest will be charged @ 1% on Assessed tax less Advance Tax paid.

  • Interest for deferment of advance tax under section 234C

Income tax has declared timelines to pay your tax and If you do not pay advance tax on due date mentioned in the table given above then the late fees in the next installment by 1 percent for the previous part will be added.

Self-Assessment Tax

If you have not been able to pay Advance Tax on time then the remaining tax can be deposited by way of self-assessment. Self-Assessment tax is deposited after the end of the financial year.

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Section 234A, 234B & 234C - Interest Imposed by the IT Department
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Section 234A, 234B & 234C - Interest Imposed by the IT Department