CA Umesh Sharma
Quick Summary
In this enlightening dialogue between Arjuna and Krishna, taxpayers are guided through the concept and nuances of Advance Tax. Krishna explains that advance tax is paid in installments across the year based on estimated income, rather than in a lump sum at year-end. The first installment for AY 2026
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FAQ :
Advance tax is income tax paid in instalments throughout the year, rather than a single lump-sum payment at the end of the financial year. It's also known as 'pay-as-you-earn' tax.
The first instalment of advance tax for AY 2026-27 is due on 15th June 2025. Taxpayers are required to pay 15% of their estimated total tax liability by this date.
Taxpayers can estimate their advance tax liability by either calculating a required percentage based on last year's total tax liability or by estimating their current year's total income and calculating the tax on it. However, using last year's figures may be less accurate due to recent changes in slab rates.
New Section 194T, effective from 1st April 2025, requires firms to deduct TDS at 10% on payments like salary, bonus, commission, remuneration, and interest on capital exceeding Rs. 20,000. This reduces the advance tax liability for partners as the firm handles the tax deduction.
Individuals with a total income up to Rs. 10,000 in a financial year, people aged 60 or over who have no business or professional income, and those opting for the Presumptive Taxation Scheme (Sec 44AD or 44ADA) are exempt from paying advance tax.
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