Advance tax payment due date for FY 2024-25: From capital gains, rent to dividends - all queries answered

Advance tax payment due date for FY 2024-25 is near. You are required to clear all your advance tax dues by March 15. As per the income-tax rules, taxpayers have to pay tax in advance if their total tax liability on income from sources beyond salary for the financial year is above ₹10,000.

The advance tax on salary is deducted and paid to the income-tax department by employers.

"Advance tax is payable if the total tax liability for the financial year exceeds ₹10,000. As such, taxpayers with incomes (such as rent, capital gains, dividends, etc.), must pay advance tax if their total liability exceeds ₹10,000," said CA Dr Suresh Surana.

"However, a resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession is not liable to pay advance tax," he added.

Who is required to pay advance tax by March 15?

According to the tax expert, the applicability of advance tax depends on the nature of income as follows:

• Income from rent: Taxed under "Income from House Property" after 30% standard deduction.

• Income from dividends: Taxed under "Income from Other Sources" at slab rates.

• Interest income: Taxed under "Income from Other Sources" at slab rates.

• Income from sale of property, equity shares and equity mutual fund units: Capital gains tax applies — either short-term or long-term at specified rates. Please note that in case of long-term capital gains on sale of equity shares/equity oriented mutual fund units is exempt upto ₹125,000 for FY 2024-25.

How much advance tax is to be paid and when?

Taxpayers have to pay advance tax on or before the following mentioned due dates:

For taxpayers, who have opted for presumptive taxation scheme under section 44AD and section 44ADA, the due date for paying 100% of advance tax liability is on or before March 15. The failure to pay advance tax may result in interest implications u/s 234B and 234C of the Income-Tax Act, 1961.

According to Section 234B, a taxpayer has to pay at least 90% of the total taxes as advance tax or TDS/TCS by March 31, failing which 1% interest applies on the unpaid tax.

How to calculate your advance tax due and pay

You become liable to pay an advance tax when your total tax liability for a financial year is over ₹10,000. The advance tax liability can be calculated based on the estimated income for the year and paid in installments as per the due dates mentioned above.

According to Dr Surana, the advance tax liability can be calculated as follows:

Determine the total expected income for the financial year, considering all sources, including business or professional income, salary income, capital gains, rental income, other income (such as interest, dividends, etc.)

Deduct eligible expenses, exemptions, and deductions available under Chapter VI-A (such as Sections 80C, 80D, etc.) from the total income to arrive at the taxable income. Please note, these deductions are available only under the old tax regime.

Apply the applicable income tax slab rates based on the taxpayer’s category (individual, firm, etc.). Further, to arrive at the total tax liability, include surcharge, if applicable, and health and education cess at 4% and reduce any available tax credits, including TDS/TCS and MAT credit (if applicable), to determine the net tax payable.

Advance tax must be paid in the installments as mentioned above. You can make this payment online after logging into the income-tax e-filing portal, using Challan No. 280.

Example: Advance tax calculation on capital gains from selling a property

Suppose you made a capital gain of ₹20 lakh from selling a property on April 5, 2024. The following table shows how much tax you have to pay and when.

*Since the property is sold before July 23, 2024, the tax rate of 20% with indexation is applicable.

Example: Advance tax calculation on capital gains equity mutual funds

Suppose you made a capital gain of ₹10 lakh on May 5, 2024, from equity mutual funds. The following table shows how much tax you have to pay and when:

*Since mutual fund units are sold prior to July 23, 2024, the tax rate of 10% is applicable.

Example: Advance tax calculation on rental income

Suppose you earned ₹5 lakh as rental income in FY 2024-25. The following table shows how much tax you have to pay and when:

In the above calculation, it is assumed that there is no other income and the taxable income is below ₹700,000 and there is no liability to pay advance tax.