Advance Tax is a system of paying income tax in phases before the end of a particular financial year for the income earned during that financial year.
It is designed to ensure systematic and timely remittance of tax and not wait till the year-end. This helps the government and tax payers in collection and payment of tax.
The last FY ie 2022-23 showed a whopping 25.90% growth in Gross Direct Tax Collections and a 12.83% growth (till Q3) in Advance Tax collections.
Are the rest of the tax payers searching “Why we should NOT pay Advance Tax”?!
Isn’t that a genuine question in front of us?
Reasons for NOT Paying Advance Tax
- Cash Flow Famine – Managing scarce fund, ensuring timely availability of funds for business operations, and meeting day to day needs of the organization is so critical that paying advance tax takes back seat.
- Uncertain Income – When income is unstable and unpredictable, calculating and paying advance tax may seem unnecessary.
- Administrative Burden – Calculation, estimation, timely payment, recording, maintaining documents and details is a challenge especially for small businesses and individuals.
- General Awareness – Too much or too little information or awareness on Advance Tax
While finding reasons for not paying advance tax, it is beneficial to ponder the advantages of paying tax liabilities in installments rather than paying it one time along with fines, penalties, and interests which further burdens the cash flows.
The advantages of paying Advance Tax could be more than your business can imagine. Stop finding reasons. Pay ADVANCE TAX – Installment ONE for Financial Year 2023-24 before June 15th, 2023