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Advance Tax: A Comprehensive Guide for 2023
Introduction
Advance tax is a tax paid in advance to the government on an estimated income during the financial year. It is also known as "pay-as-you-earn" tax. Advance tax is applicable to all individuals, companies, and firms with an estimated tax liability of more than Rs 10,000 in a financial year. In this article, we will discuss everything you need to know about advance tax for 2023.
Why is Advance Tax Important?
Advance tax is essential for tax planning as it helps taxpayers plan their finances and manage their tax liability. It also helps the government generate revenue throughout the year, which is crucial for the country's development.
How to Calculate Advance Tax?
To calculate advance tax, you need to estimate your total income for the financial year and deduct any tax exemption or deduction applicable. The remaining amount is your taxable income. You can use the income tax slab rates to calculate your tax liability. You can also use online tax calculators to estimate your advance tax.
When is Advance Tax Due?
Advance tax is payable in four installments during the financial year. The due dates for advance tax are as follows: - 15th June - 15% of the estimated tax liability - 15th September - 45% of the estimated tax liability - 15th December - 75% of the estimated tax liability - 15th March - 100% of the estimated tax liability
Consequences of Non-payment of Advance Tax
Non-payment or underpayment of advance tax attracts a penalty under section 234B and 234C of the Income Tax Act, 1961. The penalty is 1% per month on the unpaid amount until the tax liability is fully paid.
How to Pay Advance Tax?
You can pay advance tax online or offline. To pay online, you can use the income tax department's website or other authorized websites. To pay offline, you can visit any authorized bank and submit the challan for advance tax payment.
Who is Exempted from Paying Advance Tax?
Senior citizens who are 60 years or above and do not have any income from business or profession are exempted from paying advance tax. However, if they have any income from other sources, they are liable to pay advance tax.
How to Claim Refund of Advance Tax?
If you have paid more advance tax than your actual tax liability, you can claim a refund of the excess tax paid. You can claim a refund by filing your income tax return for the assessment year.
Conclusion
Advance tax is a crucial aspect of tax planning and managing your tax liability. It is essential to estimate your income and calculate your tax liability accurately to avoid any penalty for non-payment or underpayment of advance tax. We hope this guide has provided you with all the necessary information about advance tax for 2023.
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