Advance tax

Advance tax

Advance tax is a system of paying income tax in advance on a periodic basis during the financial year, as per the provisions of the Income Tax Act. Under this system, taxpayers are required to estimate their total income and calculate their tax liability for the year, and pay it in installments instead of paying the entire tax amount at the end of the year.

Advance tax is applicable to all taxpayers whose tax liability exceeds Rs. 10,000 for the financial year. The due dates for payment of advance tax are fixed by the Income Tax Department, and failure to pay the installments on time may attract interest and penalty.

Advance tax is usually paid in four installments, with the first installment due by June 15th, the second installment due by September 15th, the third installment due by December 15th, and the final installment due by March 15th. The amount of advance tax paid is adjusted against the final tax liability at the end of the financial year.

Advance tax is an important aspect of business accounting as it ensures that taxpayers pay their tax liability in a timely and regular manner, thereby avoiding interest and penalties. It also helps the government to collect revenue throughout the year, which helps in better management of public finances.

Apply for Business Accountant Certification Now!!

https://www.vskills.in/certification/certified-business-accountant

Back to Tutorial