If you have missed the deadline of March 15 to deposit the last installment of advance tax, then there is no need to panic. Many taxpayers are not able to deposit advance tax on time due to some reason, but still you have some options with the help of which you can avoid heavy penalty. However, if there is a delay, interest or penalty may be imposed by the Income Tax Department. In such a situation, it is important that you take the right steps quickly and know what you should do after missing the deadline.
What is Advance Tax?
Advance tax is the income tax which is deposited in installments in advance instead of being deposited in lump sum at the end of the financial year. Taxpayers have to deposit it in different installments as per the prescribed dates decided by the Income Tax Department. Generally, this tax has to be paid by those people whose annual tax liability exceeds a certain limit. Such taxpayers pay advance tax in a phased manner throughout the year based on their estimated annual income, so that they do not have to bear a huge tax burden at the end of the financial year.
There are some options to limit the financial loss if the deadline is missed.
Taxpayers who have missed depositing the last installment of advance tax on March 15 still have some options to limit the financial loss. As per the Income Tax Act, individuals are required to pay their tax liability in installments as per the stipulated deadline during the financial year. However, even if this deadline is missed, it does not mean that the opportunity to deposit tax is completely over. In such a situation, taxpayers can pay the tax later also, but they may have to face interest or penalty due to delay. Therefore, it is important that the outstanding advance tax be deposited on time, so that the additional financial burden can be reduced.
no need to panic
If you have not deposited the last installment of advance tax by March 15, 2026, then there is no need to panic. You can still make the payment till (or before) March 31, 2026 and it will be counted as advance tax only. However, there is a price to be paid for this grace period. He said that most taxpayers consider March 15 as just another deadline to deposit the fourth and final installment of advance tax, but failure to meet this deadline can have huge financial consequences.
How much interest will be charged on late payment?
Advance tax is usually deposited in four installments during the entire financial year. According to the rules of the Income Tax Department, taxpayers have to deposit a certain percentage of their estimated tax liability by different dates. According to the rules, 15% advance tax has to be paid by 15th June, 45% by 15th September, 75% by 15th December and 100% by 15th March. If taxpayers do not deposit the required amount by these due dates or deposit less amount, they may have to pay interest on delay. Therefore, it is important for taxpayers to keep in mind these installments and deadlines, so that additional interest or penalty can be avoided.
Know this thing
Section 234C
Experts say that if advance tax is not paid as per the prescribed quarterly deadline, then under Section 234C, interest at the rate of 1% per month is charged on the outstanding amount. Even if there is a delay of a few days, 1% interest is charged on the outstanding amount for a month, because while calculating tax, any part of the month is considered as a whole month.
Section 234B
If a taxpayer fails to pay at least 90% of his total tax liability by March 31, interest under section 234B starts accruing. In such cases, simple interest at the rate of 1% every month is charged on the outstanding amount from 1st April till payment.
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