India: Don't Forget To Pay Your Advance Taxes On Your Income!
Most of the people I come across in day to day discussion about cryptocurrencies from India are largely careless and nonchalant about their tax liability. In some cases I've seen people are ignorant about the fact they are liable to pay taxes or at the very least file their returns on time even if their income doesn't cross the basic threshold.
What is advance tax payment?
It is nothing but an advance estimation of total taxable income for the assessment year. If you have any income that generates a total tax liability of over Rs. 10,000 in a financial year then you are liable to pay advance tax.
This is applicable to all tax payers such as freelancers, traders, salaried employees, and self-employed business owners. Only senior citizens 60 years and older, and if they not engaged in any business are exempt from paying advance tax.
A tax payer is called an assessee in accounting terms and is necessitated by tax laws in India to estimate his current income in a given financial year and pay advance tax. However, you don't need submit an estimate or statement of current income to the authorities during advance tax payment.
What happens if I don't pay advance tax?
If your tax liability is more than Rs. 10,000 then you will be penalised for not having paid any advance tax. You pay interest on non-payment of advance tax u/s 234B and u/s 234C of the Income Tax Act. This amount can be substantial in some cases.
Due dates for advance tax payment
| For individual and corporate tax payers | |
|---|---|
| On or before 15th June | 15% of estimated Advance Tax |
| On or before 15th September | 45% of estimated Advance Tax |
| On or before 15th December | 75% of estimated Advance Tax |
| On or before 15th March | 100% of estimated Advance Tax |
More info here
Where do I calculate Advance Tax?
You can use this advance tax calculator on Income Tax website to calculate your advance taxes and proceed with the same. It's best to consult your auditor if you need any further assistance on this matter.
Will I get a refund If I paid more tax than necessary?
According to Taxmann
Q: I declared a higher income and paid advance tax accordingly. However, in the end of the year my total tax liability is less than what I have already paid. Will I get the excess amount back?
A: Yes. If the advance tax is paid in excess as compared to the total tax liability for that relevant financial year, then the amount paid in extra gets refunded from the Department’s end along with an interest @ 6% p.a. where the tax paid in excess is more than 10% of the total tax liable.
Cryptocurrency enthusiasts be aware!
If you are involved in cryptocurrency sale and/or purchase it is best to file your taxes on time and if your income is a substantial amount then it's advisable to pay advance tax in order to avoid issues with the tax man. This is because there is no legislation or laws regarding payment of taxes if your income is cryptocurrency derived. It is better to be safe than sorry.
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Tax payment in most Eastern countries is bit of myth in lower income groups. Usually people from low income groups don't incur taxes so the feeling is that they don't need to file them. In the long run filling taxes even if the returns are zero become more convenient.
It is not even a question of whether we agree with the tax policies or not. For the future financial safety it is always better to file the returns.
So, if you pay tax and have that returned as a benefits that's Ok. I agree that everyone must pay that anyway. The problem is when you pay and nothing come back as benefits. This so normal here in Brazil. We pay hard tax for a corrupt govern that don't give back to us nothing.
If you want to become your own boss and expand your freedom, you need to pay your taxes 4 times a year! What a pain in the ass.
In the US, we have the same thing called 'quarterly estimated taxes'. The price of 'freedom', I suppose...
Bro you have any idea on how's crypto doing in Italy?
@firepower taxation is constitutionally very wrong ...
Govt has thousands of ways for revenue generation ... tax is an easy way to suck the blood of already blood sucked hard workers ...
I really pity our system ...
sure sir
taxes are important but many are indifferent, there may be the best solution about this
Invest in the right places. Coming in the 30% slab doesn't mean you pay a 30% flat rate on whatever you earn.
With the help of a good tax planner (re: CA) you can invest in the right places so that you could claim deductions under Section 80 which could substantially decrease your tax liability.
What about Students who get scholarship like in their Masters and PhD? Do they need to be careful? As far as I know they don't have to pay tax for their salary. But what if they do crypto transactions etc? This is really a gray area it seems.
As per law it is mandatory to declare any and all income by filing your returns. Law is clear about this. Cryptocurrency income or not, any deposit into your bank account needs to be accounted for. :)
Even scholarships? I dont know any PhD student who pays tax.