Advance Tax Deadline: Income Tax Alert Last Date to Pay Advance Tax is 15 December Know Rules and Penalty

Advance Tax Deadline: This is a crucial alert for taxpayers across the country. With only three days remaining, the clock is ticking to complete a mandatory tax compliance task. According to the latest notification from the Income Tax Department, December 15 is the deadline for depositing the third installment of Advance Tax. Failing to meet this deadline could result in hefty financial penalties.

The Central Government has issued a warning to taxpayers, stating that non-payment of the advance tax by the scheduled date will attract both interest and penalties under the Income Tax Act. To avoid last-minute hassles and financial loss, taxpayers are advised to check their tax liabilities immediately.

What is Advance Tax?

While many believe tax is paid only while filing the Income Tax Return (ITR) at the end of the financial year, the Income Tax Act provides a mechanism to pay tax in installments. This system is known as ‘Pay as you earn’ or Advance Tax. However, this rule does not apply to every taxpayer; it is mandatory only for those crossing a specific tax threshold.

Who Needs to Pay Advance Tax?

According to the Income Tax Department rules, specific criteria determine who is liable to pay advance tax. Here are the details:

• The ₹10,000 Rule: If a taxpayer’s estimated total tax liability for the year is ₹10,000 or more after deducting TDS (Tax Deducted at Source), they are mandatorily required to pay advance tax.
• Source of Income: This applies to salaried individuals, businessmen, and professionals alike, provided their tax liability exceeds the mentioned limit.
• Third Installment Requirement: By December 15, taxpayers must deposit at least 75% of their total estimated tax liability for the current financial year (Assessment Year 2025-26).

Exemption for Senior Citizens

There is a relief clause for senior citizens (individuals aged 60 years or above) under the Income Tax Act. Senior citizens who do not have any income from business or profession are exempted from paying advance tax. They can discharge their tax liability at the time of filing their ITR.

Consequences of Missing the Deadline

Missing the December 15 deadline will invite strict actions from the Income Tax Department in the form of interest penalties.

Financial analysts warn that if you fail to pay or defer the payment beyond December 15, the government will charge interest on the due amount. This interest will be calculated monthly and must be paid when you file your final return, even if you clear the principal tax amount later. Therefore, to avoid unnecessary interest burdens, ensure your advance tax is paid before the cutoff date.

Disclaimer: This article is for informational purposes only. Please consult your Chartered Accountant or tax advisor for specific financial advice.