Ask me anything about Advance Tax

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15th March 2024 is the due date to pay your advance tax instalment for Q4 (Jan-Mar) for FY 2023-24.

We often think that paying taxes are a one-time thing which we need to do while filing the ITR. However, this is not entirely correct. Taxes need to be paid as and when income is earned throughout the entire financial year.

Now, in the case of salary or dividend income, the taxes are already paid in the form of TDS but, if you’re making money from capital gains or running a business (which includes intraday and F&O trading) where TDS isn’t applicable, you’re supposed to pay advance tax.

Advance tax, as the name suggests is paying your taxes in advance by estimating your tax liability for the year. These payments are generally made over 4 instalments, one every quarter.

Who is liable to pay advance tax?

If your total tax liability for the financial year exceeds ₹10,000, you need to pay advance tax by estimating your income for the entire year.

These are the due dates for each quarter.

Instalment Due date of instalment Amount payable
Q1 (Apr-Jun) 15th June At least 15% of the tax liability
Q2 (Jul-Sep) 15th September At least 45% of the tax liability
Q3 (Oct-Dec) 15th December At least 75% of the tax liability
Q4 (Jan-Mar) 15th March 100% of the tax liability

Advance tax on F&O and intraday profits

Profits from F&O and intraday are classified as business income and if you are a trader, you will have to estimate your profits for the entire financial year and pay the applicable advance taxes as per the four instalments.

Now, in case you end up paying excess taxes, you can always claim a refund while filing the ITR.

Advance tax on capital gains

In case of capital gains, advance tax needs to be paid on an accrual basis. This means you’re required to pay advance tax only when you realise gains, unlike with business income where taxes are based on estimated earnings.

For example, if you earn ₹1 lakh in capital gains in Q1, you can simply pay 15% of the total tax liability on those gains. And then in the second quarter, if you earn another ₹50,000 in capital gains, you will have to pay 45% of the tax liability on the total accrued gains of ₹1.5 lakhs.

What if you don’t pay advance tax?

If you fail to pay advance tax on time, an interest penalty of 1% per month on the outstanding amount is applicable under sections 234B and 234C.

Here’s a detailed video we made on Advance Taxes.

You can ask your queries below!

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2

If I have incurred a loss of 4 lakhs in F&O trading during the first quarter of the financial year and I intend to set it off against the interest earned from Government Securities, will I still be required to pay advance tax on the G-Sec interest?

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Hey @Jayadratha,

Advance tax liability is calculated after taking into consideration any deductions or losses that you will claim.
Hence, in your case, if the tax liability after the losses from F/O are set-off against interest income is below ₹10,000, you will not be required to pay advance tax.

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4

If the tax liability after offsetting exceeds Rs 10,000, will the advance tax liability be calculated from the beginning of the financial year or from the date when the accrued interest was sufficient to cover the losses?

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Hey @Jayadratha,

The tax liability will be calculated from the 1st quarter.

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6

Oh god, please don’t tell me the taxes and charges we pay on every order is separate and additional to taxes we have to pay? :sob:

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Hey @suprxf,

Taxes need to be paid when you make any gains from trading. You can however claim the transfer charges that you have paid as an expense while calculating your net profits.

The last day to pay your advance tax is 15th March. You can use Quicko to calculate your advance tax liability.

Here’s a guide for you: Calculate Advance Tax on Quicko

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Does Quicko support huge transactions order import from zerodha over 10CR turnover. The last time when i used Quicko it didn’t support it and i have tried now it doesn’t support now as well( Timeout Issue).

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Hi @rajesh_m,

Please reach out to us at [email protected] with your registered email and we will get it checked.

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What are transfer charges?

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Whether it is compulsory to conduct tax audit by CA in income tax return of every retail f&o trader or there is any limit of turnover in case he has to take into account the expenses of business income in his return

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Hi @Mahinder_Kumar_Sharm,

In the case of income from trading, a Tax Audit is mandatory only when your turnover exceeds ₹10Cr.

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Hey,

Charges like brokerage charges, stamp duty, exchange levy, etc., can be claimed as expense while filing your ITR. Remember, STT (Securities Transaction Tax) is not an allowable expense in case of capital gains.

Hope this helps!

15

Is Quicko is free for Zerodha user ?

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@Quicko
How long do we have to wait before buying the same share again if we have sold that for tax harvesting?

If I have sold some shares on Monday (T) can we buy them on Tuesday (T+1)?

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Who should pay advance tax? I get a generic answer that if my tax liability is 10000 or above I must pay advance tax. I am not profitable with 4.5L in fno trading as per Zerodha statement, but Quicko shows 0 in advance tax page. What should I do now? Need guidance please.

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You can buy them on T also by adding 20% blocked margin money yourself. What is problem with that? Will just be counted as an intraday trade.

Book loss and adjust holding price

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What if I earned 10 lakhs from March 16 to March 31.

Will I be charged an interest penalty ?

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Hey @Tamil_N,

Advance Tax needs to be calculated after considering all sources of income, deductions and any taxes that you have already paid throughout the year. Therefore, to calculate advance tax liability on Quicko, you need to add all of these details on the ‘New v/s old regime’ feature on the Planning Tab to calculate advance tax liability.

Here’s a guide for you: Calculate Advance Tax on Quicko

Hope this helps!

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Hey @dtyxg,

Advance tax needs to be paid on estimated income for the entire year. Hence, if you are going to earn income after 15th March, the same needs to be estimated and advance tax needs to be paid before the due date.

The only exception is income from capital gains. In that case, you can pay advance tax till 31st March without any interest penalty.

Hope this clarifies.

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