In general scheme of taxation a taxpayer is required to pay income tax after the conclusion of the financial year, However, if the total income tax payable is more than 10,000/- in a financial year then the tax is to be paid in advance as per due date.
Who needs to pay Advance Tax
Every taxpayer, whether he is a salaried employee, freelancer or having business income in a proprietorship, Firm, OPC, LLP or a company is required to pay income tax on advance basis if the tax is more than 10k during the FY
Who is exempt from advance tax
an Individual, HUF or firm whose income is taxed on the presumptive basis under income tax is not required to pay tax in advance, this relaxation is ordinarily available to small business, paying tax as a % of the turnover and not on actual profits.
What is presumptive taxation
The taxpayer under presumptive taxation has to pay tax on 8% of the turnover. Only individual, HUF and partnership firms qualify for presumptive taxation. In case of trading, the turnover limit is two crore whereas for professionals it is 50 lacs.
The advance tax must be paid within due date; the dates are provided hereunder for easy reference. On the late payment of advance tax, the taxpayer is liable for an interest @ 1% per month or part thereof.
Interest on deferment of advance tax
If the advance tax is not paid within its due date then apart from the interest for late payment, the taxpayer is also required to pay another interest @1% for deferment of tax for each month of delay or a part thereof