Advance Tax in GST and Income Tax

Advance Tax refers to the income tax that should be paid in advance instead of a lump sum amount of payment at the end of the year. 

It also refers to the pay as you earn tax. Such payments have to be made in an installment as per due dates provided by the income tax department. 

An advance tax is paid by any salaried, freelancers and businesses which means if your total tax liability is in an amount of Rs 10,000 or more in a financial year that you have to pay advance tax.

Advance tax is applied to all taxpayers, salaried, freelancers, and businesses along with seniors who are 60 years or older than that and who do not run a business are free from paying advance tax.  

Presumptive income for business- Any taxpayers who have opted for presumptive taxation scheme under 44AD have to pay the whole amount of their advance tax that too in one installment. 

Presumption income for professionals- Independent professionals like doctors, lawyers, architects, etc comes under the presumptive scheme under section 44ADA. They have to pay the whole of their advance tax liability. 

Advance Received under GST  

Some general rules for the time of supply for services are earliest: 

  • Date of issue of invoice 
  • Date of receipt of payment or advance 
  • The date on which invoice should be issued 

The advance is received before the issue of the invoice the time of supply would be the date of receipt of advance. 

Thus, the taxpayer receiving advance must pay GST on the money received. 

Advance Tax in Income Tax 

If someone is a salaried employee then they should pay advance tax as the employer deducts it at a source called TDS. Advance Tax is applicable when an individual has a source of income other than the salary. 

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