Advance Tax: The government relies on taxes to fund its activities like building infra and providing various services. India has organised a tax collection plan called tax structure. People pay taxes based on their income, following specific tax slabs in which they are in. Some pay the tax just before the deadline, while some pay after the deadline with a fine. Advance tax is one such method determined based on your payment time and method. Let us briefly know about it to effectively manage tax plan.
What Is Advance Tax?
Advance tax is paying a part of your income tax early instead of all at once at the end of the year. Generally, people pay in smaller amounts on specific dates set by the income tax department. It's often called 'pay as you earn'. As it is the same year of income. It is believed that this tax type of payment will be more manageable throughout the year.
Who Can Pay Advance Tax?
According to the Income Tax Act's section 208, if you’re an income taxpayer who owes more than Rs 10,000 in taxes for the year, you can pay advance tax.
It applies to salaried employees, self-employed individuals and business professionals. This includes money from shares, interest on fixed deposits, rent, or income from renting out a house. Senior citizens aged 60 and above are exempt from paying advance tax.
Step By Step Guide To Calculate The Advance Tax
Step 1: Figure out how much money you've earned, not including your salary.
Step 2: Subtract all your expenses, like medical insurance, phone bills, and travel costs, from your income.
Step 3: Add any extra income which you earned, such as interest from FDs, house rent, or lottery winnings.
Step 4: If the tax amount you calculated is more than 10,000, then you need to pay advance tax.
You can also calculate advance tax on the Income Tax Department's official website
Follow these simple steps mentioned below
Step 1: log on to the official income tax website or use the following link
(https://incometaxindia.gov.in/Pages/default.aspx)
Step 2: Click on the “tax information and services” on the navigation bar
Step 3: Select “tax tools” on the drawer and click on advance tax calculator, or follow the link below to open the advance tax calculator.
(https://incometaxindia.gov.in/Pages/tools/advance-tax-calculator.aspx )
Step 4: Enter the necessary details and submit.
By following these steps, you can efficiently calculate the advance tax accurately on IT department's official website.