ITR Advance Tax Deadline on December 15 What Is It? How to Pay Tax Before the Due Date? Here’s Everything You Need to Know

As the ITR advance tax deadline on December 15 approaches, taxpayers need to ensure they meet the required payments to avoid penalties and interest charges. If you are still unsure about how the system works or what you need to do, here’s an explanation of the advance tax, its significance, and how you can pay it before the due date.

What is Advance Tax?

Advance tax refers to the system in which taxpayers pay their estimated income tax liability in installments throughout the year, rather than paying the entire amount at the end of the financial year. This system is applicable to those whose tax liability exceeds ₹10,000 in a financial year. The government introduced this system to ensure a steady inflow of tax revenue throughout the year and to prevent taxpayers from facing a huge financial burden at the time of filing their Income Tax Returns (ITR).

Advance tax payments are spread over four installments, with the third installment due on December 15, making it a crucial date for taxpayers who haven't made their payments yet.

How Does the Advance Tax System Work?

Advance tax payments are based on your projected income for the year. If you earn income that is not subject to tax deduction at source (TDS), such as income from business, freelance work, or rental income, you are required to pay advance tax.

The key to understanding advance tax is estimating your total income for the financial year. Once you know your estimated income and apply relevant deductions and exemptions, you can calculate your total tax liability. This total amount is then divided into four installments as follows:

1. June 15 – First installment: 15% of total advance tax
2. September 15 – Second installment: 45% of total advance tax
3. December 15 – Third installment: 75% of total advance tax
4. March 15 – Final installment: 100% of total advance tax

Why Is the December 15 Deadline Important?

The December 15 deadline is significant because it marks the third installment of advance tax payment. By this date, taxpayers need to pay 75% of their total estimated tax liability for the year. Missing this deadline can result in interest penalties and even legal consequences. The government imposes interest under Section 234B and Section 234C of the Income Tax Act for delays in advance tax payments.

• Section 234B imposes interest at a rate of 1% per month on the outstanding amount if advance tax is not paid.
• Section 234C imposes interest at 1% per month if the taxpayer does not pay the required amount in each installment on time.

How to Pay Advance Tax?

Paying your advance tax is a simple process. Here’s how you can do it:

1. Visit the Income Tax Department’s Official Website: Go to the Income Tax e-filing portal.
2. Log in to Your Account: If you don't have an account, you’ll need to create one.
3. Navigate to the “Pay Taxes” Section: Choose the option to pay advance tax.
4. Select the Appropriate Tax Payment Category: Choose "Advance Tax" and enter the relevant details, such as the assessment year and the amount of tax to be paid.
5. Choose Payment Mode: You can pay the tax through net banking, debit card, or UPI.
6. Submit the Payment: After submitting, you will receive a receipt for the payment. Keep this receipt for your records.

Additionally, you can also make payments through authorized banks that provide services for income tax payments.

What Happens If You Miss the Deadline?

Missing the December 15 advance tax deadline comes with consequences. Not only will you incur interest charges as mentioned earlier, but failure to pay the advance tax on time could also affect your ability to file your ITR without complications. It could lead to a larger tax burden and possible penalties when you file your returns.

However, if you are unable to make the payment by December 15, it's important to pay as soon as possible to minimize interest charges. The government will continue to charge interest on the unpaid amount until it is paid in full.

Tips to Manage Advance Tax Payments:

1. Estimate Your Income Early: If your income is variable or seasonal, try to estimate it as accurately as possible. This helps you avoid overpaying or underpaying your taxes.
2. Use Online Tools: Use online calculators or consult with a tax professional to ensure that you are paying the right amount of advance tax.
3. Set Reminders: Set up reminders well in advance for each installment date to ensure timely payments.
4. Pay Through Net Banking or UPI: These are often the quickest and most reliable ways to pay your taxes.
5. Keep Track of Your Payments: Retain your payment receipts and check your ITR filing status regularly to avoid discrepancies.
   
   
   

   To sum up, paying advance tax on time, especially by the December 15 deadline, is essential to avoid penalties and interest charges. By estimating your income and tax liability early in the year, you can make the necessary payments without stress. Take advantage of the online tax payment system, and ensure your financial year ends smoothly by meeting the tax requirements on time.