The Income Tax Department has issued an important reminder—March 15, 2025, is the last date to pay the final installment of advance tax for the financial year 2024-25. If you haven’t settled it yet, you have just two days left!
Why is This Important?
Advance tax is a system where individuals and businesses pay their taxes in installments throughout the year instead of making a lump sum payment at the end. This helps in better financial planning and prevents a heavy tax burden at once.
The tax department emphasized the significance of timely payments, stating, “Advance Tax for FY 2024-25 is due by March 15, 2025. Paying on time ensures compliance and supports the ‘Viksit Bharat Movement’—India’s journey toward growth and self-reliance.”
Who Needs to Pay Advance Tax?
If your total tax liability (excluding salary-based TDS) exceeds ₹10,000 in a financial year, you are required to pay advance tax. Here’s how it works:
- Salaried employees usually don’t need to worry as their employers deduct TDS.
- However, if you have extra income from business, rent, dividends, or capital gains, you need to calculate and pay advance tax separately.
- Failure to pay can lead to interest penalties under Section 234C.
Advance Tax Payment Schedule
| Due Date | Tax Payable |
|---|---|
| June 15 | 15% of total tax |
| September 15 | 45% of total tax |
| December 15 | 75% of total tax |
| March 15 | 100% of total tax |
Missing deadlines can lead to penalties. The interest rate for delayed payment is 1% per month on the shortfall amount.
What Income is Considered for Advance Tax?
- Rental Income: Taxed under ‘Income from House Property’ with a 30% standard deduction.
- Dividends & Interest: Taxed as per individual slab rates under ‘Income from Other Sources.’
- Capital Gains: Tax on property sales, shares, and mutual funds depends on whether it is short-term or long-term. For FY 2024-25, long-term gains on shares/mutual funds are tax-exempt up to ₹1,25,000.
Steps to Calculate & Pay Your Advance Tax
- Estimate Your Income: Include earnings from all sources—salary, business, rent, capital gains, etc.
- Deduct Exemptions & Deductions: Apply eligible deductions under Chapter VI-A (like 80C, 80D) to arrive at taxable income. Note: These deductions are available only under the old tax regime.
- Compute Your Tax Liability: Apply the relevant slab rates, add cess (4%), and deduct any TDS already paid.
- Make Your Payment: Use Challan No. 280 on the income-tax e-filing portal to pay online.
Act Now to Avoid Penalties
Advance tax payments help avoid last-minute rush and penalties. With just two days left, ensure you meet the deadline and stay compliant!
For any queries, visit the Income Tax Department website or consult your tax advisor today!