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!