Income Tax
Advance Tax — Meaning
Tax paid in instalments during the financial year itself, before the year ends.
What is Advance Tax?
Advance tax is income tax paid in instalments during the financial year in which income is earned, rather than at the time of filing ITR. It is required when total tax liability for the year exceeds ₹10,000. Payment schedule: 15% by June 15, 45% by September 15, 75% by December 15, 100% by March 15. Not paying advance tax correctly attracts interest under Section 234B (3% p.m.) and 234C (1% p.m. per instalment). Salaried employees whose entire tax is covered by employer TDS are generally exempt.
Related terms
More Income Tax terms
ITR (Income Tax Return)
Annual declaration filed with India's Income Tax Department reporting income, deductions and tax paid.
AY (Assessment Year)
The year in which income earned in the previous financial year is assessed and taxed.
FY (Financial Year)
The 12-month period from April 1 to March 31 during which income is earned and recorded.
PAN (Permanent Account Number)
Unique 10-character alphanumeric identifier issued by the Income Tax Department to every taxpayer.
TAN (Tax Deduction Account Number)
10-character number required by entities that deduct or collect tax at source (TDS/TCS).
