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It’s time to clear your advance tax liability

Written by Gagandeep Arora - Printed on - Date - 12th March 2022

You may agree that paying taxes is the most annoying part of earning and financial growth, the more you earn the bigger the amount of tax outgo. But the good part is that the tax you pay to the government is used for various purposes like infrastructure development, maintenance of public facilities, social good, subsidies for under-privileged and so on.

However, there is a quote by famous American sociologist, theorist, and empirical researcher Mr James Samuel Coleman, “the point to remember is what the government gives it must first take away.” Therefore, as Financial Year 2021-22 is coming to an end, make sure you clear your advance tax liability.

Paying the tax

We all are aware that if there is an income then you are liable to pay tax to the government on it. The important point here is to understand is that taxes are the backbone for the proper functioning of the government. Most of the development that takes place in any country is done with the help of the taxes collected by the good noble citizens of the nation. The infrastructural development or to finance our defence department as well as to finance the different schemes for underdeveloped sectors of the society are all carried out with the help of the taxes.

By paying taxes on time and sincerely not only do you benefit the government but if you look at the larger picture you benefit yourself in many ways. You live in a developed nation and excuse yourself from the unnecessary burden of penalties and lighten your worries by paying taxes on time and before the yearend. The last date of payment of Advance Tax is 15th March of the Assessment Year.

Advance Tax

As the name suggests Advance Tax is the tax paid in advance before the financial year ends. In other words, the total amount of estimated income is paid to the Income Tax department according to the due dates given by them in the same year the income is received. The specific section of people who are required to pay Advance Tax as per section 208 of the Income Tax Act are Individuals who have a tax liability of Rs 10,000 or more are liable to pay Advance Tax. Senior citizens more than 60 years of age are exempt from this tax.

The procedure of calculation of Advance Tax is very simple, sum up the total income earned from all the other sources besides the salary earned then deduct your expenses from that amount to this add other income from your other sources now if the amount calculated is more than Rs 10,000, then you are liable to pay Advance Tax.

Modern times has made the cumbersome process of payment of taxes very simple. The simplest way is to make the payment online sitting in the comfort of your office or home. Otherwise, some challans are accepted by many banks in place of Advance Tax

The benefit

Advance tax is the tax paid much before the financial year ends or ‘Pay as you earn.’ The total amount is paid in instalments on the specified due dates all year-round instead of a lump sum amount paid in the end. A fact which any individual would relate to is that it is better to pay small sums than one large amount. Secondly, it pinches to pay extra in the form of penalties if we miss the due dates or the wrong amount is deposited. Check out the penalties that are charged below.

Procrastination is human nature but in the case of paying taxes, it is important to be vigilant and pay the amount on time because there are penalties charged in case of defaults Under Section 234 A, 234 B and 234C, interest is charged @ 1% from the due date till the date the return is filed.