What is advance tax
Advance tax is the taxes paid in advance on the estimated income of the current financial year. It is a way of paying tax on an ongoing basis rather than waiting until the end of the year. In India, individuals and businesses require to pay advance taxes if their tax liability for the year is more than Rs. 10,000.
To Visit https://www.incometax.gov.in/
Quick assets are those assets that can easily and quickly convert into cash within a short period of time, usually within 90 days. Advance taxes deduct from current assets while calculating quick assets because it considers as pre-payment of income liability. It can claim as a refund if the actual taxes liability for the year is less than the amount paid as it. Therefore, it can treat as a current asset until the final tax liability determine and the excess amount refund.
FAQs:
What is Advance Tax?
It is the payment of income tax in installments throughout the financial year, instead of a lump sum at the end.
Who is required to pay Advance Tax?
Individuals and businesses whose total tax liability exceeds a certain threshold (e.g., ₹10,000 in India) are required to pay.
How is Advance Tax calculated?
It is calculated based on the estimated total income and applicable tax rates for the financial year.
What are the due dates for paying Advance Tax?
It is typically paid in four installments throughout the year (June 15, September 15, December 15, and March 15).
Can salaried individuals be required to pay Advance Tax?
Yes, if they have additional income sources like rent, capital gains, or business income that result in a higher tax liability.
What is the benefit of paying Advance Tax?
Helps avoid a large tax burden at the end of the year and reduces the likelihood of interest penalties.
Can I claim deductions when calculating this Tax?
Yes, deductions under applicable sections (like 80C, 80D) can be considered while estimating taxable income .
What if I overpay Advance Tax?
If you overpay, the excess amount can be refunded or adjusted against future tax liabilities.
Is Advance Tax applicable to businesses?
Yes, businesses with significant income are required to pay in installments based on their projected earnings.
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