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Advance Tax Payment Online

Advance Tax Details

Last Updated 19th Jan 2022

  • Advance tax payment is mandatory for all assessee whose estimated tax liability is above ₹ 10,000.
  • The calculation of advance tax is made by applying the tax slab rate on the estimated income of an individual for the concerned year.
  • The payment of advance tax is to be done in 4 instalments.
  • The deadlines of four instalments are 15 June, 15 September, 15 December, and 15 March.
  • In case of late payment of advance tax, 1% of interest is applicable as late fee as per Section 234B and 234C.
  • If at the end of the year, your actual tax liability is less than the advance tax submitted by you, then you are eligible to claim the refund.
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Advance Income Tax Payment

Advance tax refers to the tax to be deposited by a taxpayer with the income tax department during the year without waiting for the end of the year. This is to ensure that the government is able to collect taxes more uniformly throughout the year. While the government collects tax at source by mandatorily applying TDS, in some cases a person's income, though taxable, does not attract full TDS and hence, the person can claim an Income tax refund. Conversely, in some cases, TDS deducted may be less than the total tax liability for the year. In all such cases, the advance tax has to be deposited.

Advance Tax Payment Criteria

If your total tax liability (after adjusting for TDS) exceeds ₹ 10,000 (Rupees Ten Thousand) in a financial year, then you must pay advance tax. Advance tax applies to all tax payers including salaried, freelancers, professionals and senior citizens. However, senior citizens who are above 60 years of age and do not run a business are exempted from paying advance tax. While calculating the advance tax, you need to include income from all sources for the current year under various income heads. Some of the common exceptions for payment of advance tax are:

  • Senior citizens (above the age of 60 years) who are not running any business are exempt from paying advance tax.
  • Salaried individuals under TDS net, are not required to pay advance tax on income from salary. However, they may still need to pay advance tax on income from other sources such as interest, capital gains, rent and other non salary income.
  • If the TDS deducted is more than tax payable for the year, one is exempted from paying advance tax.

How to calculate advance tax?

  • First of all, you need to estimate your income earned for the year. Note that the advance tax calculation is based on an estimate of income. The various heads of income that should be taken into account are: interest income, capital gains, professional income, rent, income of minors whose income is clubbed with that of the taxpayer and any other income that is likely to accrue during the year.
  • Now, add the salary income to the above income to determine the gross taxable income. Note that while advance tax is not payable on salary, the sum total of salary and income from other sources may change the applicable tax slab and result in additional tax liability.
  • Now, apply the latest applicable income tax slab to calculate the payable tax.
  • The next step is to subtract TDS that is already deducted or is likely to get deducted as per TDS slabs applicable for various types of income. For more on TDS rates, click here.
  • In case the tax liability after deducting TDS is more than ₹ 10,000, you must pay advance tax.
  • Advance tax calculator is available online on Income Tax Department website. You can fill all the required details and know the amount you have to pay as advance income tax.
  • Note that sometimes, you may not be able to estimate the expected income correctly and at the end of the year, may find the income to be more than what you had expected. In such a scenario, in case you did not pay the full advance tax on time, you may be required to pay interest and penalty for no payment of advance tax. Hence, it is prudent to estimate the income carefully and pay slightly higher advance tax than what may be due. You can claim credit for the same in your ITR and get refund of the same.

Advance Tax Payment Due Dates for AY 2020-21

It is important to pay advance tax on or before the due dates to avoid paying interest and penalty at the time of filing annual return of income. Advance tax due dates for self employed, businessman and corporate taxpayers for FY 2019-20, AY 2020-21 are as follows:

Advance Tax Due Dates Advance Tax Installment Amount
On or before 15th June Not less than 15% of advance tax liability
On or before 15th September Not less than 45% of advance tax liability
On or before 15th December Not less than 75% of advance tax liability
On or before 15th March 100% of advance tax liability

Advance Tax Payment Online

Now you can pay advance tax online by using Challan ITNS 280 and selecting "Type of Payment" as "(100) Advance Tax". The challan is available online on income tax department website https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp. Payment can be made using netbanking facility of major banks in India. Advance tax challan is generated instantly and is identified by 3 unique fields - (1) BSR code of the bank branch, (2) Date of payment and (3) serial number. Keep a copy of the challan with you and check that it reflects correctly in the Form 26AS available on income tax website. You can claim credit for the advance tax paid at the time of filing your ITR after the end of the year.

Penalty for non-payment of advanced tax

Interest under section 234B:- If you fail to pay advance tax or the tax paid by you is less than 90% of the assessed tax, then you will be liable to pay simple interest at 1% every month. In case no advanced tax is paid, interest will be calculated on the amount which is equal to the tax levied, or else it will calculated on the amount by which advance tax paid falls short of assessed tax.

Penalty under section 234C:- In case if you don't pay your due advance tax installment in time then you will be charged a simple interest of 1% for the next 3 months on the amount of shortfall as a penalty. The penalty is purely due to the delay in paying the due advance tax.

What if advance tax is paid more than required?

Sometimes it happens that the advance tax paid by you is higher than your tax liability. In that case you will receive the excess amount as a refund. However, if the amount is more than 10% of tax liability, you will be entitled to get an interest at the rate of 6% per annum from Income Tax Department.

FAQs

Can I pay advance tax after the due date?

Yes, you can pay advance tax after the due date. However post due date it will attract interest as well due to late payment.

When should advance tax be paid?

Advance tax is payable in four deadlines; June 15, September 15, December 15, and March 15.

What is the penalty for late payment of advance tax?

The late payment penalty of advance tax is covered under two sections.

  • Under Section 234C: 1% of interest on the amount of advance tax not paid as per the specified limit.
    • 15% of the tax liability by June 15
    • 45% of the remaining tax liability by September 15
    • 75% of the remaining tax liability by December 15, and
    • 100% of the remaining tax liability by March 15.
  • Under Section 234B: If up to 90% of the advance tax liability is not paid by the end of the fiscal year, then 1% of simple interest is applicable as a penalty.

Is the payment of advance tax compulsory?

If the tax liability is above ₹ 10,000, then it is compulsory to pay advance tax. However, for salaried, the companies deduct the tax automatically under TDS.

Who is liable for advance tax?

As per Section 208 of the Income Tax Act 1961, every person whose tax liability for the year ₹ 10,000 shall pay tax in advance, under the advance tax.

How is advance tax payment calculated?

Advance tax is calculated by applying the applicable tax slab rate to the estimated income of the individual for the year.

Can salaried person pay advance tax?

Yes, a salaried person can also pay advance tax. In fact, the advance tax applies to all assesses, including salaried employees.


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