Tax return filing is an annual ritual but tax planning is something that is done throughout the year to better manage the taxes and save some too. Advance tax payment is one such tax planning that can better manage tax payments. Advance tax involves making tax payments in instalments to avoid the lumpsum outflow of cash which can easily disrupt the financial budget.
What is Advance Tax?
Advance tax is applicable if the tax liability, after deducting prepaid taxes like TDS, and relief, exceeds INR 10,000 in a financial year. It should be paid in the year in which the income is earned which is why Advance tax is also called a ‘pay-as-you-earn’ tax. Advance tax payments shall be done at quarterly intervals on the 15th of the last month of each quarter.
What are the methods for advance tax payment?
There are 2 methods to pay advance tax.
1) Online via IT Portal
2) Offline via Bank Branch
1. Steps for Advance Tax Payment online via IT portal
Below are the steps to make online payment via IT portal:
- Visit the e-filing portal
- Now navigate to e-pay tax
- Enter PAN/TAN and mobile number and verify using OTP
- Now select the Income tax category
- Add the relevant Assessment year & select advance tax payment under minor head 100 as the type of payment
- Further, add tax break-up details
- Select the payment mode > continue > pay now
- Select I agree to the terms and conditions and click on Submit to the bank
- Complete the tax payment on the bank’s page.
2. Steps for payment of Advance Tax Offline
- Visit the bank branch and ask for the applicable tax payment challan form-Challan 280 (in this case).
- Fill in the details as required in the form. The details asked in the form are the same as required in the online form.
- Go to the relevant bank’s counter and submit the filled-in Challan 280 form along with the money. Taxpayers can pay the taxes either in cash (max INR 10,000) or by cheque.
- The bank official will give a receipt by tearing off a portion of the challan, filling in the details of payment, and stamping it.
Once the payment is completed, either online or offline method, keep the receipts safely as proof of payment. The Annual Information Statement (AIS) generated on the IT Portal will reflect the tax paid under the section “B3- Information relating to payment of taxes“.
A taxpayer can log in to the IT Portal, and navigate to the e-file tab> e-Pay Tax> Payment History.
The taxpayer can also refer to AIS which contains the details of taxes paid.
In case the bank does not have an online payment facility or is not an authorized bank then the taxpayer can make a payment of tax by visiting an authorized bank. Hence, it is not mandatory to hold a bank account with an authorized bank.
No, a taxpayer need not file any return while making an advance tax payment, only tax payment has to be made on the IT Portal.
Yes, if income in India exceeds INR 10,000 they are liable to pay advance tax.