Advance Tax on Individuals having freelancing or share trading

Advance tax is a systematic approach to pre-pay income tax before the conclusion of the financial year. It is applicable to individuals, including those deriving income from business or share trading, if their tax liability surpasses a specified threshold.

Lets have a look at key aspects pertaining to the relevance of advance tax for individuals earning from business or share trading are as follows:

1. Threshold for Advance Tax:

   • Individuals are obligated to remit advance tax if their aggregate tax liability for the financial year amounts to Rs. 10,000 or more.
   • The liability encompasses income from diverse sources, including salary, business, profession, capital gains, among others. Need help ? Write to experts: info@bizzguru.in
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2. Due Dates for Advance Tax Installments:

   • Advance tax is disbursed in installments on designated due dates during the fiscal year.
   • The scheduled due dates for advance tax payments typically fall in June, September, December, and March.
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3. Calculation of Advance Tax:

   • Taxpayers are mandated to project their annual income and compute the tax liability for the year.
   • Advance tax payments are made in installments based on the estimated tax liability.
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4. Business and Share Trading Income:

   • Individuals earning income from business or share trading must factor in these earnings when estimating their total income for advance tax computation.
   • The estimation should encompass profits or gains from business activities, speculative income, and capital gains arising from the sale of shares.
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5. Penalties for Non-payment or Underpayment:

   • Failure to remit advance tax or underpayment may result in the imposition of interest under Sections 234B and 234C of the Income Tax Act.
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6. Adjustment in the Final Return:

   • The advance tax payments made throughout the year are reconciled against the total tax liability during the final filing of the income tax return.
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7. Presumptive Taxation for Businesses:

   • Some individuals engaged in specific professions or businesses have the option to choose presumptive taxation under Sections 44AD, 44ADA, and 44AE. In such instances, there is no requirement to estimate income, and advance tax is computed based on the presumptive income.

It is imperative for individuals involved in business or share trading to be cognizant of advance tax provisions and adhere to the payment schedule to mitigate penalties and interest charges. Seeking advice from tax professionals or financial advisors can offer personalized guidance based on individual circumstances.