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Missed Advance Tax Payment? Salaried Individuals Can Still Avoid Penalties: Here’s How

Salaried employees can still avoid any penalties imposed under Section 234C provided that they request for additional TDS deductions before March 31.

Salaried workers that did not meet the advance tax requirement for March 15 may still act to avoid penalties under Section 234C before March 31st. Generally, employers will deduct Tax Deducted at Source (TDS) from salaries, satisfying the entirety of the related tax liability. However, additional income from investment or freelancing opportunities or other sources may not be covered, leading to possible tax shortfall.

To avoid interest charges under Section 234C, which assesses a penalty of 1% for not paying tax on time, employees should let their employers know about any additional income and ask the employer to increase the TDS deduction prior to March 31. By doing this, any additional owed tax can be paid in the current financial year and interest will be avoided.

Alternatively, individuals can directly remit the due tax as an advance tax before March 31st. But, any payment that is made after the deadlines would still be subjected to interest under Section 234C. Hence, generally it is more beneficial to communicate with the employer and request TDS deductions.

It is important to act promptly because if any tax dues remain unpaid as of March 31, you may incur additional interest under Section 234B, regarding failure to pay advance tax. It is important to settle all tax liabilities prior to the end of the tax year in order to stay compliant and avoid charging additional interest.

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