Advanced Tax

Advance tax means income tax should be paid in advance instead of lump sum payment at year end. It is also known as pay as you earn tax. These payments have to be made in instalments as per due dates provided by the income tax department.
Apart from tax deducted at source (tds), the government collects taxes on a quarterly basis in the form of advance tax before the end of a financial year, ensuring constant flow of tax revenue during the year rather than at the year-end. This also reduces the burden on taxpayers as the tax liability can be discharged through quarterly payments, resulting in smaller cash outflows.
Advance tax is required to be paid by the taxpayer in specified instalments, as per the due dates provided by the income tax laws. The first instalment of advance tax for the financial year 2020-21 (i.e. April 1, 2020 to march 31, 2021) is due on june 15, 2020. In this article, we shall discuss the provisions in relation to advance tax that an individual taxpayer needs to keep in mind.