The Danger of Ignoring Advance Tax
- Who must pay? Salaried employees generally do not need to worry about Advance Tax because the employer deducts TDS on the salary. However, if you have other income (Capital Gains from stocks, massive FD interest, or freelance income) and your tax liability exceeds ₹10,000, you are legally obligated to pay advance tax.
- The Senior Citizen Exemption: Senior Citizens (60 years or above) who do not run a business or profession are entirely exempt from paying advance tax, even if their tax liability from rent, FDs, or capital gains is over ₹10,000.
- The 44ADA / Presumptive Exemption: If you are a freelancer or small business owner filing taxes under the presumptive taxation scheme (Section 44AD or 44ADA), you do not need to pay tax in 4 installments. You only have to pay a single installment (100% of the tax) on or before March 15th.