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Consequences of non payment of Advance Tax


What is Advance Tax? The income Tax payers have to estimate their income for the current year (for example – current year is starting from1st April 2014 and ending on 31st March 2015) and compute the applicable taxes on such income. The taxes so computed have to be paid to the department as ‘Advance Tax’ during the current year.


Corporates have to pay advance tax in 4 installments starting 15th June and ending on 15th March. The non-company tax-payers have to pay advance tax in 3 installments.


Due Date to pay Advance Tax

Non-corporate tax-payers

  • On or before 15th September – not less than 30% of estimated tax liability
  • On or before 15th December – not less than 60% of estimated tax liability
  • On or before 15th March – not less than 100% of estimated tax liability


Non-corporate tax-payers

  • On or before 15th June – not less than 15% of estimated tax liability
  • On or before 15th September – not less than 40% of estimated tax liability
  • On or before 15th December – not less than 75% of estimated tax liability
  • On or before 15th March – not less than 100% of estimated tax liability


Exemption from payment of Advance Tax

  • Resident Senior citizens (age 60 years on or before end of previous year) if they do not have income from business and profession.
  • An assessee who has opted for the scheme under section 44AD on presumptive basis at the rate of 8 percent of turnover
  • No Advance tax payable if estimated tax liability for whole financial year is less than Rs. 10,000/-


How to pay Advance Tax

  • All tax-payers are required to get their accounts audited u/s 44AB (Tax audit) and all companies (irrespective of the turnover) are mandatorily required to make electronic payment of taxes through internet banking facility or through credit or debit cards.
  • Other tax-payers can make either online tax payment or through normal banking (by way of cheque/cash).


Can the taxes be paid from other’s account?

  • When you pay money to the government, they are least bothered about it. You can make the payment from your own account or from the account of any other person (maybe from your friends account or tax consultant’s account or spouse account etc.)
  • Taxes can be paid through any authorized bank or authorized branches (which means you needn’t have account in such bank/branches)


Important Aspects which you should know

  • Write the correct PAN
  • Choose the correct Assessment Year (for example, The Assessment Year for the current year is 2015-16)


Consequences of Non-Payment of Taxes

  • Under Section 243C, the tax-payer will have to pay a simple interest on the amount of short payment (or non-payment) @ 1% per month for 3 months. Suppose, the advance tax payable for 1st Installment is Rs.40000 and if such amount is not paid, the interest payable is 1% of Rs.40,000 for 3 months. Similarly, the advance tax payable (cumulatively including the tax payable in 1st installment) upto 2nd installment is Rs.80000; the interest payable is 1% of Rs.80000 for 3 months.
  • Interest u/s 234C shall not be payable if the advance tax payable is less than Rs.10000
  • Even one day delay attracts Interest u/s 234C; suppose instead of payment on or before 15th September, you end up in paying on 16th September, the interest u/s 234C to be paid at 3%. So, even a day’s delay attracts three month’s interest.
  • Apart from interest as explained above, if entire tax liability has not been paid before 31st March, tax payer will have to pay interest @ 1% for every month or part of the month from April 1 to the date of actual payment.


What happens if you pay more taxes?

It is a possibility. Your estimate of income may go wrong. You may end up in paying taxes that is more than what is required. So, what can be done in such cases? Ask for refund from the department. You can file income tax return seeking tax refund. If the taxes paid are more than 10% of the actual tax, the department will pay interest at 0.5% for every month (or part thereof) from the first day of the assessment year to the date of grant of refund.


On who’s name advance tax Cheque is to be issued 

Advance Tax can be paid  through cheque.  You should issue cheque as “your bank name a/c Income Tax“.  Suppose if you are depositing cheque in ICICI Bank,  then to cheque should be issued in favour of “ICICI Bank A/c Income Tax



  • It is advisable to pay advance tax as per the due dates on the estimated income
  • It is advisable to pay the taxes online through net banking. Those who don’t have net banking facility may get one soon
  • Pay taxes through your own account. It will be easy to track or trace the payment from your bank account
  • Check 26AS and confirm that the taxes paid by you are credited to your account at income tax department
  • Don’t wait for the last day to pay the taxes. Pay it off at the earliest possible date.


To make online payment of Advance tax Click This Link To Download challan Click this Link


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About CA Prasad Chartered Accountant

CA Prasad Chartered Accountant
CA Prasad is a practicing Chartered Accountant and partner in Bangalore -based CA Firm. For further information or query, please email it to [email protected]