If you don’t pay your advance tax in India, there are consequences, including penalties and interest charges. Advance tax is a way for individuals and businesses to pay their tax liability in installments throughout the year instead of paying a lump sum at the end of the financial year. The tax liability is estimated based on your expected income for the year, and advance tax payments are due on specific dates throughout the year.
If you don’t pay advance tax, the Income Tax Department may impose a penalty equal to 1% per month of the tax amount that was due but not paid. Additionally, interest may be charged at 1% per month on the outstanding tax liability until it is paid in full. This interest may be compounded, which means that interest will be charged on the outstanding interest as well as on the outstanding tax.
It’s important to note that if you don’t pay advance tax, it can also negatively impact your credit score, making it harder for you to obtain loans or credit in the future. If you’re unable to pay your tax liability in full, it’s a good idea to contact the Income Tax Department to make arrangements for a payment plan.