Advance Tax means income tax which is to be paid in advance. The Scheme of Advance Tax is also known as Pay as you earn scheme. The advance tax is to be paid in various installments, which are spread over the financial year.
The income of the financial year is not earned in a single day but it is spread throughout the year and that is why such tax is collected by the government not on any particular day but throughout the year. This is the reason that scheme of advance tax is also known as PAY AS YOU EARN SCHEME.
An assessee is required to pay advance tax if his tax liability for advance tax is Rs.10,000 or more. You will have to pay advance tax as per various installments. Advance tax applies to all taxpayers such as salaried, freelancers, and businesses. Senior citizens, who are 60 years or older, and do not run a business, are exempt from paying advance tax.