Advance Tax Payment involves the practice of paying estimated income tax in installments during the financial year, rather than as a lump sum after year-end. While the process itself is usually straightforward, businesses commonly run into avoidable issues along the way. Here are the mistakes we see most often, and how to steer clear of them.
Mistake 1
Underestimating income and under-paying installments.
Mistake 2
Missing installment due dates and incurring interest.
Mistake 3
Not accounting for TDS already deducted while estimating liability.
Mistake 4
Ignoring advance tax obligations on capital gains realized during the year.
How to Avoid These Issues
Most of these mistakes come down to preparation. Having the right documents ready — Estimate of total income for the financial year, Prior year's tax liability for reference, TDS already deducted or expected during the year, among others — and understanding the process before you start goes a long way toward a smooth outcome with the Income Tax Department's advance tax payment schedule.
Quick Reference: What You'll Need
- Estimate of total income for the financial year
- Prior year's tax liability for reference
- TDS already deducted or expected during the year
- Applicable advance tax installment schedule
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