Advance tax collection in personal income tax has jumped almost double after completion of the third instalment. December 15 was the due date for the third instalment of advance tax. Improvement in advance tax shows economy on recovery.
According to government sources, after the third instalment, the total advance tax collection reached over 3.45 lakh crore as against ₹2.09-lakh crore of the previous fiscal. showing a growth of 65 per cent. Total Advance tax related to personal income tax jumped to around ₹95,000 crore as against around ₹48,000 crore showing a growth of around 98 per cent.
For corporate tax, three instalments of advance tax gave over ₹2.50-lakh crore as against over ₹1.61-lakh crore showing an increase of around 56 per cent.
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Improvement in advance collection boosted overall number as gross collection from April till date reached over ₹9.64-lakh crore as against ₹6.42-lakh crore of the corresponding period in FY 2020-21 showing an increase of 50.3 per cent. After deducting the refund, the net collection reached over ₹8.29-lakh crore as against ₹4.96-lakh crore, registering a growth of over 67 per cent.
Advance tax is the income tax paid in advance for the income earned in a particular financial year. Usually, the tax is to be paid when the income is earned. Still, under the tax provisions of advance tax, the payer has to estimate the income for the entire year. And based on this estimate, the tax is paid at specific time intervals. Here, it is important that the taxpayer estimates the income and then calculates the estimated tax on it to check whether he or she needs to pay the advance tax and how much.
As per section 208 of the Income Tax Act 1961, every person whose estimated tax liability for the year is more than or equal to 10,000 is liable to pay advance tax. Those who are excluded from paying advance tax are senior citizens who are above the age of 60, not having any income from business or profession.
One can pay the advance tax in four instalments by the 15thday of June, September, December and March. On or before June 15, 15 per cent of advance tax is payable. By September 15, it should be 45 per cent of the payment less the amount already paid. By December 15, it will be 75 per cent of advance tax less already paid and the balance amount by March 15. Non-payment of advance tax will invite interest.