Advance tax is the income-tax amount a taxpayer pays in advance for a particular financial year. Generally, taxpayers pay the outstanding tax at the end of the financial year. Because of this one-time payment, they must pay substantial amounts in a single go. But in the case of advance tax, taxpayers can pay the estimated tax in four instalments in the current year only, which helps reduce their financial burden.

Advance tax is applicable to individuals, self-employed professionals, and businesses whose estimated tax liability for the financial year exceeds a certain threshold. Let’s find out who is required to pay advance tax.

Who Should Pay Advance Tax?

As per Section 208 of the Income Tax Act, individuals with an estimated tax liability of Rs. 10,000 or higher for a financial year must make advance tax payments.

Also, taxpayers who opted for a presumptive taxation scheme under Section 44AD or Section 44ADA are liable to pay advance tax.

However, a resident senior citizen aged 60 years or above in the relevant financial year and who does not generate any income from a business or profession is exempt from the obligation to pay advance tax.

Advance Tax for Senior Citizens

If an individual has a tax liability of more than Rs. 10,000 in a financial year, they must deposit advance tax. But there is some relief for senior citizens. Senior citizens who do not have any income from business or profession do not have to pay advance tax.

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