{"id":4261,"date":"2013-03-31T01:36:12","date_gmt":"2013-03-30T20:06:12","guid":{"rendered":"http:\/\/www.apnaplan.com\/?p=4261"},"modified":"2013-03-31T01:50:05","modified_gmt":"2013-03-30T20:20:05","slug":"advanced-tax-payment-by-salaried-employees","status":"publish","type":"post","link":"https:\/\/www.apnaplan.com\/advanced-tax-payment-by-salaried-employees\/","title":{"rendered":"Advanced Tax Payment by Salaried Employees"},"content":{"rendered":"
If you have paid attention to newspapers in last few days, there are lots of advertisements from Income Tax Department about paying your advance taxes before March 31, 2013.<\/p>\n
Most Salaried individuals are not aware about advance tax and there is a misconception that Advance taxes needs to be paid by businessmen or self employed professionals. But salaried employees too need to pay advance tax under following conditions:<\/strong><\/p>\n Lets explain the concept of advance tax by an example.<\/p>\n Mr. Ram has annual salary of Rs 15 lakhs and he falls in highest tax bracket of 30%. He also has Rs 10 Lakhs in fixed deposit with a bank which pays him interest of 9% every year.<\/p>\n Salary Income =<\/strong>\u00a0Rs 15 lakhs<\/p>\n For salary income, the employer deducts TDS and submits the same to the income tax department and hence Ram need not be worried about advance taxes on his salary income.<\/p>\n Interest income<\/strong> = Rs 10,00,000 x 9% = Rs 90,000<\/p>\n Also Read:<\/span> How you loose money in Fixed Deposits?<\/a><\/strong><\/span><\/p>\n For individuals, advance tax is payable in three installments in a financial year.<\/p>\n So for FY 2012-13 (AY 2013-14) the advance taxes needs to paid as follows:<\/p>\n Here the Tax difference<\/strong> means the difference between the actual tax liability and the TDS<\/em>.<\/p>\n So if we take above example, Mr. Ram had to pay<\/p>\n The advance tax dates have been extended till March 31, 2013 so the last installment can be paid on or before this date.<\/p>\n Paying advance tax is simple. You need to go to income tax website and fill the relevant form <\/a>and pay online through your bank account.<\/p>\n You can also do it offline by visiting the nearest bank branch which deals with income tax.<\/p>\n As I mentioned earlier, the awareness about advance taxes in not high among salaried class and hence they might have skipped paying advance taxes.\u00a0In case you have not paid advance taxes, a penal interest of 1% simple interest per month on outstanding tax is charged u\/s 234C and 234B<\/strong>.<\/p>\n We take the above example and there are two situations:<\/strong><\/p>\n Situation 1:<\/strong> <\/span>Mr. Ram skipped the advance tax payment in September and December and paid on March 31, 2013.<\/p>\n The interest he needs to pay is:<\/p>\n So on March 31, 2013 has to pay Rs 18,540 along with additional Rs 501 as penal interest u\/s 234C<\/p>\n Situation 2:<\/span>\u00a0<\/strong>Mr. Ram did not pay in FY 2012-13 and pay the tax during filing of Tax Return on July 31, 2013<\/p>\n He has to pay this Rs 742 (u\/s 234B) along with the Rs 501 (u\/s 234C) calculated above as the penal interest.<\/p>\n In case you do not want to go with all the hassel of calculating taxes and paying advance taxes, the easiest way out is to declare income from other sources to your employer. They would accordingly calculate your tax liability, deduct TDS from your salary and deposit it with income tax department.<\/p>\n Here are some situations where I think salaried employees need to take care about payment of advance taxes:<\/p>\n I am sure you can come out many more such situations but remember to pay advance taxes if you have any other income.<\/p>\n Today is the last day of FY 2012-13. You must calculate your tax liability for this financial year and pay advance taxes if applicable. You can do it online or go to your bank branches today. The banks and income tax office both are open for business<\/a> today.<\/p>\n Also its good time to start planning for next year which starts tomorrow. You can download the Income Tax calculator for FY 2013-14 and start planning your taxes accordingly.<\/p>\n You can download the following files for calculating your Income Tax liability and also to know How to save Tax!<\/p>\n [wpdm_file id=44]<\/p>\n [wpdm_file id=45]<\/p>\n [wpdm_file id=46]<\/p>\n \n\n
Example:<\/h3>\n
\n
When is Advance Tax Payable?<\/h3>\n
\n
\n
How to pay Advance Tax?<\/h3>\n
What if you don\u2019t pay Advance Taxes?<\/h3>\n
\n
\n
The easier way out?<\/h3>\n
Exemption from paying Advance Taxes<\/h3>\n
\n
Situations salaried employees need to pay Advance Tax<\/h3>\n
\n
Conclusion:<\/h3>\n
Resources:<\/h3>\n
Advertisement from Income Tax Department<\/h3>\n