Advance tax calculation is very simple as every layman can do it without difficulty. First of all, you should know that advance tax is paid in installments as we have discussed in previous article. Secondly, you should know that are you liable to pay advance tax, if yes, then this article is for you if not then you should read the article to know how to calculate advance tax. In this article we will discuss about how to calculate advance tax for individuals, HUFs, partnership firms, companies and others.

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Estimate Income to calculate advance tax

Advance tax will be calculated on the estimate income during the year. It is the tax, which paid by us in advance to the Government. The tax which is paid on actual income called self-assessment tax. The income should be correctly estimated according to last year average.

If any capital gain or any other income earned after paying installment, then next installment should be revised accordingly. And if such income earned after 15th March then it should be deposited before 31st March.

Rates of advance Tax

The advance tax rates are calculated by the income tax slab for that assessment year. Suppose if we treat today date to calculate advance tax, i.e. 11th Aug, 2014, then we see the income tax slab for the A.Y. 2015-16. And we estimate the income for F.Y. 2014-15.

Penalty on Failure to Pay Advance Tax

The advance tax is mandatory for those, whose tax is more than Rs.10,000 during the year. So, if the payment is not made or shortly made, then it attracts the penal interest for short payment and non-payment of advance tax.

We will also cover the topic of “interest on failure to deposit Advance Tax” in detail later. So we advise to new visitors that subscribe for your email ID or like our Facebook page to latest updates on your favorite topic.

How to calculate Advance Tax?

After calculating the entire tax on the income of the F.Y. 2014-15, split it according to the percentage of installment. See our article Advance Tax Installment and Due Dates.

For Example:

Mr. X calculate/estimate his income Rs.3,87,000/- for F.Y. 2014-15.

Tax on the income is 12050/- (including surcharge and education Cess)

So Mr. X is liable to pay advance tax as his tax is more than Rs.10,000/-

Advance Tax is payable in this case is Rs.12050/-, but it is paid in installment, and installments will be as follows.

1st installment by 15th Sept, 2014 – (30% of 12050/-) = 3615/-

2nd installment by 15th Dec, 2014 – (30% of 12050/-) = 3615/-

3rd installment by 15th March, 2014 – (40% of 15862/-) = 4820/-

So in above example, in case of Mr. X re-estimates his income or earned the short-term or long term income then Mr. X should revise the advance tax accordingly.

Mr. x is liable to pay interest u/s 234C for any short payment of advance tax. We will cover this topic in our next article. So stay with us and subscribe your email id.

Hope you liked our article and understood that how to calculate advance tax. However, you can ask your queries by writing your comment in the form given below. We will try to answer within 24 hours.

14 Responses to How to Calculate Advance Tax?

  1. Dnyaneshwar says:

    pls tell about how the estimation of income be calculated.

  2. INTAZAR says:

    GOOD ARTICLE VERY USEFUL FOR ME, THANKS

  3. niranjan says:

    very-2 good article & its so useful for me

  4. Yugal says:

    very good information sir, thank you so much…

  5. Rajesh Sharma says:

    Thank you sir it is very much usuful for me.once againc thank u sir…

  6. venkatesh says:

    Thank you very much. very good information

  7. Anand says:

    good artical

  8. Mrutyunjaya parida says:

    Sir,
    Good day,

    thanks for very good information. My question is i am working in a pvt ltd we expect profit will be in F/Y 2013-14 Rs 9,00,000/- during F/Y 2013-14 tds certificate will be receivable Rs1,26,000/- (as per A/Y 2013-14), please guide me how i will be calculate advance tax
    i.e Rs. 9,00,000/- * 30.3%= Rs 2,72,700/-
    Less Tds = Rs 1,26,000/-
    now tax liabilities is Rs 1,46,700/-

  9. satya vasavi says:

    good article helped me a lot thank u

  10. syamsundar says:

    when the estimate of income will be done and on what basis?

  11. rishi kumar says:

    sir good evening i want to know that how to calculate estimated profit in the running partnership firm for advance tax purposes so pls guide me

  12. Nitin Pareek says:

    sir i have get 350000/ pa salary & i have invest in ppf & mutual fund than how i will calculate my advance tax for a.s year 2014-15

  13. Pramod Kumar Bhardwaj says:

    Good Evening Sir

    My question is i am working in a Pvt Ltd. My Salary is Rs. 25000/- P.M. ( F.Y. 2014 – 2015 ) and My Child Tution Fee is Rs. 70000/- P.A. (Approx) , What will be my Liability of Income Tax/ TDS ?

  14. SUJATHA S says:

    THANKS FOR GIVING SUCH USEFUL INFORMATION

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