Advance tax deadline: Who all should pay these taxes by December 15? Can you pay after time limit?

Advance tax, also known as income tax paid in advance for income earned within the same financial year, is a crucial aspect of tax compliance. Often referred to as 'pay, as you earn' tax, individuals and businesses with a tax liability of Rs 10,000 or more in a financial year, are mandated to pay advance tax to meet regulatory requirements. This obligation extends beyond just corporations and business owners, as even salaried individuals must adhere to these guidelines.

It is imperative for taxpayers to stay vigilant and ensure timely settlement of their advance tax dues to avoid any penalties or non-compliance issues. 

Quarterly payment

To fulfill this obligation, advance tax must be paid in four installments before the financial year concludes on June 15, September 15, December 15, and March 15. This year, the deadline for the third installment of advance tax payment for the financial year 2024-25 falls on December 15. 

Taxpayers must make a payment of 15% of their estimated advance tax liability by June 15th. By September 15th, 45% of the total amount due should be paid, followed by 75% by December 15th, and the remaining 100% by March 15th.

Payment schedule

Deadline for advance tax payments:

June 15, 2024: Submit 15% of the advance tax liability.
September 15, 2024: Submit 45% of the advance tax liability (minus any previous payments made).
December 15, 2024: Submit 75% of the advance tax liability (minus any previous payments made).
March 15, 2025: Submit 100% of the advance tax liability (minus any previous payments made).

Tax payment

For salaried individuals, their employers deduct tax before disbursing salaries at the end of the month. However, other sources of income like interest from deposits, capital gains from selling shares, mutual fund units, etc., are not taken into consideration. When calculating advance tax liability, it is important to include these additional incomes.

If you are self-employed and have chosen the presumptive taxation scheme, the rules are different. While self-employed individuals still need to pay advance tax, they have the option to make one payment in the last quarter of the financial year, by March 15. This adjustment is made to accommodate the challenges faced by small businesses in estimating their advance tax liability at the beginning of the financial year.

Deadline on Sunday

Given that December 15, 2024, falls on a Sunday, taxpayers are confused they would be allowed to make the tax payment on December 16.  As per the Income Tax circular, one should note that if the due date for advance tax payment coincide with a public holiday, the subsequent business day will be recognised as the final deadline for payment.

“Taxpayers should note that while the due date for the third installment of advance tax for FY 2024-25 is December 15, 2024, which falls on a Sunday, payments can be made by December 16, 2024. However, they must ensure that the due date will be December 15 for all subsequent periods, provided it does not fall on a weekend or public holiday,” said Amit Bansal, Partner, Singhania & Co.