Advance Tax Deadline Approaches: Why The Third Installment Can Be Paid Until December 16 This Year

The third instalment of advance tax for the financial year 2024-25 is due on Sunday, December 15, 2024. Taxpayers must ensure that 75% of their total tax liability is paid by this date. However, due to an existing Income Tax Department circular, payments made on Monday, December 16, 2024, will be accepted without any penalties. This provision stems from a circular dated January 14, 1994, which clarifies that if a due date falls on a public holiday, payments made on the next working day are considered timely.

Who Needs to Pay Advance Tax?

Advance tax is required for taxpayers whose liability exceeds ₹10,000 after deducting TDS. This includes individuals with additional sources of income such as rent, capital gains, or lottery winnings, as well as self-employed individuals and business owners.

Certain groups are exempt from paying advance tax. These include resident senior citizens who do not earn income from business or profession and individuals opting for presumptive taxation under most sections (except Section 44AE), who can pay the entire tax by March 15.

Penalties for Delayed Payments

Failure to meet the advance tax payment deadlines can result in penalties under Sections 234B and 234C of the Income-tax Act. Section 234C imposes a 1% monthly interest for shortfalls in instalments, while Section 234B applies a 1% monthly interest if 90% of the total tax liability is not paid by March 15.

However, taxpayers who miss the December 15 deadline due to the public holiday on Sunday, December 15, can pay their dues on the next working day, December 16, without facing these penalties. The Income Tax Department’s circular ensures that payments made on December 16 are treated as on time.

Conclusion

The third instalment of advance tax for FY 2024-25 is due by December 15, 2024, but payments made on December 16, 2024, will be considered on time due to the public holiday. Taxpayers must ensure timely payments to avoid penalties and interest under Sections 234B and 234C.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.