Missed the Advance Tax Deadline? Here’s How You Can Avoid Penalties

If you missed the March 15 advance tax deadline, don’t panic! You still have a chance to avoid interest penalties if you take action before March 31.

Why March 31 is the Final Deadline

If you don’t pay advance tax or get additional TDS deducted by March 31, you may face:

• Section 234C interest for delaying tax payments.
• Section 234B interest if you haven’t paid at least 90% of your total tax by this date. This interest (1% per month) will continue until you file your Income Tax Return (ITR).

Understanding the Penalties: Section 234C & 234B

• Section 234C: You are charged 1% interest per month if you don’t pay your advance tax on time.
• Section 234B: If you have not paid at least 90% of your total tax by March 31, you will be charged 1% interest per month until you file your ITR.

Who Needs to Pay Advance Tax?

If your total tax liability for the year exceeds ₹10,000, you must pay advance tax in four installments. This applies to salaried employees who earn additional income, such as:

• Capital gains (stocks, property, etc.)
• Rental income
• Interest from savings accounts or fixed deposits (FDs)
• Freelancing or side income
• Earnings from crypto or stock trading

Why Salaried Employees Often Overlook Advance Tax

Most salaried individuals don’t think about advance tax because their employers deduct Tax Deducted at Source (TDS) from their salary. However, this TDS only covers salary income. If you have extra income, your employer won’t deduct tax for it, and you’ll need to pay it yourself.

Can Employers Refuse Extra TDS Requests?

Though legally allowed, employers may refuse to deduct extra TDS for reasons such as:

• March payroll has already been processed.
• The extra tax is more than your salary amount.
• Internal company deadlines (e.g., March 10 or 15) for tax adjustments have passed.

How to Avoid Penalties If You Have Extra Income

You have two options to avoid interest charges:

1. Pay Advance Tax Before March 31 – If you earned extra income in the last quarter (January to March), you can still pay your advance tax by March 31 to reduce or avoid interest under Section 234C.
2. Ask Your Employer to Deduct Extra TDS from Your March Salary – Inform your employer about your additional income and request extra TDS deduction. The Income Tax Act allows such adjustments, and you only need to provide a simple signed statement—no special format required.

To avoid unnecessary penalties, make sure to pay your advance tax or adjust your TDS before March 31!