Difference Between Advance Tax and Self-Assessment Tax

Understanding Tax Payments: Advance Tax and Self-Assessment Tax serve different purposes. Clear understanding prevents compliance issues. Advance Tax: Known as 'Pay As You Earn' tax. Paid in installments throughout the year based on estimated income. Helps avoid a large lump-sum payment at year-end.

Self-Assessment Tax: Paid after the financial year ends. Based on actual income and deductions. Settles any outstanding tax liability before filing the return. Example of Advance Tax: Prashant, with INR 45,000 estimated liability, pays quarterly to avoid interest. Use code 100 while paying online or offline.

Example of Self-Assessment Tax: Esha, with INR 7,000 tax due, pays before filing her return. Use code 300 for payment.

Key Differences: Advance Tax: Paid throughout the year if liability exceeds INR 10,000. Self-Assessment Tax: Paid at the end of the year to cover any remaining tax. Interest Penalties: Non-payment of Advance Tax attracts interest under sections 234C and 234B, while Self-Assessment Tax attracts interest under section 234A.