If you missed the first instalment, you can pay it along with the upcoming second instalment, but with interest

If you happen to be in the category of advance tax payers and this year too you qualify for it, do remember that you have to pay the second instalment of advance tax by 15 September. Till last financial year, 15 September was the first due date of advance tax payment for tax payers other than companies. But from this fiscal, the first instalment has been advanced to 15 June. Also, the percentage of advance tax to be paid by 15 September has increased. If you have missed the first instalment, you can pay it along with the upcoming second instalment, but with interest on the due taxes.

Advance tax liability, schedule

Under section 208 of the income-tax Act, 1961, advance tax liability for an individual taxpayer occurs when tax on expected annual income exceed Rs.10,000. To calculate the tax liability, one should take into consideration income under all the five sources—income from salary, business and profession, capital gains, house property and others. From financial year 2016-17, one has to pay advance tax instalments in four instalments, versus three till last year. The first instalment date was 15 June, by when one had to pay 15% of the estimated tax liability. The second instalment is due on 15 September, by when 45% of the tax liability has to be paid. The next dates are 15 December and 15 March, by when 75% and 100% of the tax liability, respectively, should be paid.

Interest on due tax

If you were not aware of the new schedule and missed paying the first scheduled instalment, you can pay it along with the second one. However, the tax that was to be paid by 15 June will attract 1% interest per month (under section 234C of the Act). For instance, if your tax liability would have been assessed on 15 June as Rs.1 lakh for the fiscal, you should have paid Rs.15,000 (15% of Rs.1 lakh) as the first instalment of the advance tax. If you missed paying this, you can pay it along with Rs.450 (1% interest of Rs.15,000 per month from June to August). So, your total advance tax liability for the second instalment would be Rs.45,450 (45% of Rs.1 lakh plus Rs.450 interest on due tax).

If you also miss the 15 September deadline as well, the same process will be applied. You will have to pay interest on the tax due on both the instances till the next instalment. The interest calculation will continue till you pay the due taxes.

How to pay?

Make sure you meet your tax liability as per the schedule to avoid paying unnecessary interest on due tax. You can pay the advance tax using tax payment challans (challan number 280) at bank branches authorised by the income tax department.

You can even pay advance tax online. Logon to the income tax department’s website www.incometaxindia.gov.in and click on e-Pay taxes tab on the left side. You will be directed to the National Securities Depository Ltd (NSDL) website. Click on challan no./ITNS 280, fill the required details and make the payment.