Tax Liability is the entire amount of tax that an individual, organization or establishment owes to any central, state or local taxing authority like the International Reserve Service (IRS). In layman’s terms, it is the amount of money that you are responsible for paying the government on the basis of the income that you earn in a given year. Generally, taxes are filed or paid at the end of a financial year, i.e., April 1st to March 31st.
Similarly, Advance Tax Liability is the amount of money that you are responsible for paying the government on the basis of the income that you are expected to earn in a given year, but Advance Tax is paid at the beginning of the year instead of a lump sum payment at the end of the year. Also referred to as the pay as you earn tax, it is the income tax payable if your total tax liability is greater than INR 10,000 in a given financial year.
Advance Tax payments are made in installments in accordance with the Income Tax Department’s deadlines. These payments guarantee a stable flow of income throughout a year so the government can fulfill its requirements.
There Are Three Categories Of Taxpayers Liable To Pay Advance Tax:
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