Sunday, December 10, 2023

Your Guide to Advance Tax for 2023-24: Avoiding Hassles and Interest Charges


As we navigate through the financial year 2023-24, understanding advance tax becomes crucial, especially with the third instalment due before 15th December 2023. This guide aims to make the process clear, covering how to calculate, pay, and the consequences if you miss the boat.

Advance Tax Schedule Simplified

Paying advance tax involves four instalments, each with a specific due date:


Due Date


Before 15th June 2023


Before 15th September 2023


Before 15th December 2023


Before 15th March 2024

Some individuals are exempt, like those without business income or if you're sixty or older.

How to Calculate Your Advance Tax

Here's the breakdown for each instalment:

Due Date

Amount to Pay

June 15

15% of advance tax

Sept 15

45%, minus what you paid in June

Dec 15

75%, minus what you paid in earlier months

March 15

The full amount, minus earlier payments

Remember, these amounts are calculated after considering any tax already deducted at source (TDS).

Example: Mr. Kumar's Story

Let's take Mr. Kumar, estimating his income for 2023-24:

·         Business Income: Rs. 5,95,000

·         Income from house property: Rs. 23,000

·         Interest on deposit (TDS Rs.1,200): Rs. 12,000

·         Dividend income (TDS Rs. 4,000): Rs. 40,000

·         Other income (TDS Rs. 3,000): Rs. 30,000

After all calculations, his advance tax liability is Rs. 36,000.

What Happens If You Miss a Payment?

If you pay less than you should in any instalment, you'll be charged interest at 12% on the remaining amount. It's a good idea to avoid this!

Section 234B: The Interest Part

Section 234B says if you don't pay at least 90% of what you should, you'll face a 1% monthly interest charge from April 1st until your total income is figured out.

In a Nutshell

The 15th December 2023 deadline for the third instalment is crucial. Understanding the process, paying on time, and avoiding interest charges is not just a rule, but a smart financial move. Failing to meet these advance tax obligations might lead to extra costs under section 234B. So, keep track of your income, stick to deadlines, and pay your advance tax to stay on the right side of the law and your finance