As the name suggests, it refers to paying a part of your yearly taxes in advance. Advance tax is the income tax payable if your tax liability exceeds Rs 10, 000 in a financial year. Advance tax should be paid in the year in which the income is received. Hence, it is also known as the 'pay-as-you-earn' scheme. Advance tax is applicable when an individual has sources of income other than his/her salary. For instance, if one is earning through capital gains, interest on investments, lottery, house property or business, the concept becomes relevant. Any rebate due fetches you an interest of 0.5 percent every month, or, six percent annually, as in the case of an income tax refund. However, if you don't pay the advance tax on time, you'll be charged one percent every month, or, 12 percent a year.
Delhi, India
