What is advance tax?

By the name, it can be easily deduced that Advance tax means the tax paid in advance.

Advance tax is the tax paid by an assessee in the Previous Year itself based on his estimated income.

We know that Income tax liability is known in the Assessment Year based on the income of the Previous Year. But, the government encourages the taxpayers to pay the tax in the Previous Year itself based on the estimated income.

As per section 208 of the Income Tax 1961, if the total income liability on the estimated income comes up more than Rs. 10,000, then advance tax has to be paid.

The advance tax has to be paid according to the following schedule for the individual and corporate assessees [Other than the assessee who computing profits on a presumptive basis under section 44AD(1) and 44ADA(1)]:

Any amount paid by the way of advance tax on or before 15^th March shall be treated as advance tax paid during each financial year on or before 15^th March.

Also as per section 219, the tax credit is given for the advance tax paid in the regular assessment of income tax.

In case of non-payment or short payment of the advance tax,  interest is payable as per section 234B. Interest is also attracted in case of delayed payment of advance tax as per section 234C.

That’s all, I would conclude my answer hoping that it was helpful in making the concept of advance tax easy to grasp.