Advance Tax Payment Procedure Online on TIN-NSDL

Advance tax is the income tax payable if your tax liability exceeds INR 10,000 in a financial year and it should be paid in the year in which the income is earned. It is also called the ‘pay-as-you-earn’ scheme. It is required to be paid at quarterly intervals. The advance tax due dates for payment is on the 15th of each quarter-end.

Advance Tax Filing (Quarterly)
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000 after TDS deducted
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Advance Tax Filing (Quarterly)
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000 after TDS deducted
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There are two methods for payment of Advance Tax:

  • Online via TIN NSDL.
  • Offline via Bank Branch.

Steps for Online Payment of Advance Tax

  1. Aceess the TIN NSDSL e-payment Portal.

    Visit the TIN NSDL e-payment portal and Select Challan 280.

  2. Select the tax applicable and Payment Type.

    Select the Tax Applicable as (0021) Income Tax (Other than Companies). Later select Type of payment as (100) Advance Tax.

  3. Select Mode of Payment and name of Bank.

    Next, select the mode of payment from the different options and the name of your Bank.

  4. Enter the Details asked.

    Enter PAN and Other Details including your email Id and contact number.

  5. Select the Assessment Year.

    After selecting the Assessment Year, enter captcha and click on Proceed.

  6. Click on “Submit to the bank”.

    Verify the details that were entered and Click Submit.

  7. Now you can login to the net banking account of your bank to make the payment.

    Once you make the payment you will get challan counterfoil with Bank details. Save it for future reference.

Steps for payment of Advance Tax Offline

  1. Visit the bank branch and ask for the applicable tax payment challan form-Challan 280 (in this case).
  2. Fill in the details as required in the form. The details asked in the form are the same as required in the online form.
  3. Go to the relevant bank’s counter and submit the filled-in Challan 280 form along with the money. The tax payment can be made either in cash or cheque.
  4. Once you give the money and challan and the bank official will give you a receipt by tearing off a portion of the challan, filling in details of payment, and stamping it.
Tax Hacks 102: Advance Tax
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Tax Hacks 102: Advance Tax
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Once you have completed your advance tax payment by either the online or offline method, you should keep the receipts safely as proof of payment. It can approximately take up to 10 days to reflect in your Form 26AS. Your income tax payment should show in your Form 26AS Component ‘Part C – Details of Tax Paid’.

FAQs

I forgot to save my Challan for tax payment, what should I do?

You can know details of Advance tax paid from your Form 26AS. Hence download Form 26AS from the income tax e-filing portal and show the same in your ITR.

What should I do if my bank does not have an online payment facility or is not an authorised bank for E-Tax ?

In case your bank does not have an online payment facility or is not an authorized bank then you can make electronic payment of tax from the account of any other person who has an account with the authorized bank having online facility.

What if my account gets debited twice for the Advance tax payment?

You should contact your Bank and ask for correction for double payment made for Advance tax.

Reprocess the ITR : e-Filing portal

Once you file an income tax return, the IT Department processes your return and sends an Intimation comparing the figures as reported in the ITR and as computed by the IT Department.

There are 2 possibilities in the Intimation :

  • Computation of Income & Tax as reported in ITR match with figures computed by the IT department.
  • There is a mismatch in the figures in ITR filed and figures computed by the IT department.

Types of Mismatch in Intimation

  • Mismatch in Tax credit.
  • Advance Tax mismatch.
  • Clerical error
  • Higher Demand of Tax than reported.
  • Less Refund of Tax than reported.

If the assessee does not agree to some clerical/arithmetical error in intimation issued, then assessee can opt for Reprocessing of his ITR form on Income Tax e-filing portal

Steps to Reprocess the ITR

Follow the below given steps to Reprocess ITR:

  1. Go to Income Tax E-filing Portal

    Login using valid credentials on Income Tax e-Filing portal

  2. Click on e-file on the Dashboard

    And select “Rectification” from the drop-down list.

  3. Select the Order/Intimation from the drop-down list you want Reprocess

    And click on “Continue”.

  4. Select “Only Reprocess the Return”

    From the drop-down list in Request Type.

  5. Click on “Submit” and your request will be submitted.

    On successful submission, a return will be sent to CPC for “Reprocessing”.

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FAQs

When can Request for “Reprocessing the Return” can be submitted?

Rectification Request for Reprocessing ITR can be filed only for the returns which are already processed by the CPC, Bangalore.

Can rectification request be filed online?

Yes, rectification request must be filed online on e-filing portal mandatorily.

How many times a request can be submitted for any particular ITR?

Rectification Request can be submitted only once for any particular ITR.

What is Due Date for filing the Rectification Request?

The due date for filing rectification request is 31st March of the relevant assessment year of the period for which ITR is filed.

Income Tax Payment for TDS, Advance Tax, Self Assessment Tax and Penalties

The procedure of payment of income tax can be completed on the TIN-NSDL portal. It’s one of the major sources of revenue for the government. And it is how they can invest in developing infrastructure and maintain it. In India, the central and state-level government has a right to collect taxes.

How much tax one pays will depend upon how much they earn and what slab do they fall in. The basic exemption limit for Individuals and HUFs below the age of 60 years is INR 2.5 Lakhs in AY 2019-20.

The different types of income tax / income tax payments In India are given below:

Income Tax Payment in the form of TDS

Tax Deducted at Source is a way to tax income when it is generated. so as to prevent tax evasion. TDS is applicable on payments like salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc. Deduction of TDS depends on the rate (which varies by the nature of payment) prescribed by the Income Tax Act of India.

The Entity who is responsible to deduct TDS shall apply for TAN (Tax collection Account Number) and is liable to issue a TDS certificate. Deductor is also responsible for the TDS payment.

Income Tax Payment in the form of Advance Tax

Advance Tax is a tax liability where a taxpayer pays its dues in installment in the same financial year. Anyone whose tax liability exceeds Rs 10000 is required to pay Advance tax. As of 2016-17 taxpayers under the presumptive taxation scheme will have to pay their due before 15th March. Advance Tax payments and calculation will depend on the nature of the taxpayer’s income and professional. For salaried individuals whose only income source is salary, they do not have to pay advance tax. Freelance and Professionals have to estimate their annual income before calculating their tax payments. Taxpayers can pay advance tax in one of two ways: Either They can pay it through advance tax challan or they can pay it using Net Banking Facility.

280 challan

Income Tax Payment in the form of Self Assessment Tax

Self Assessment Tax is tax liability computed by the taxpayer on its own and paid before filing IT Return. A taxpayer does not have to pay it if their actual dues are less than Advance Tax and TDS combine. Payment is done in one of two ways: Either they can pay self-assessment tax challan or they can do it through Net Banking facility.

Surcharge: A Tax on Tax

A surcharge is an additional tax levied by a government on assessees whose income exceeds Rs 50 lakhs. The calculation of surcharge is on income tax and not the actual income. The rate applicable for surcharge depends on the policy for that particular assessment year.

Cess: A fundraising Tax

The government collects cess for a special cause like education, health, etc. And unlike other taxes mentioned above, it is collected for a particular period and might be altered or completely removed.

Indian Government collects different types of Cess Like Education Cess, Swachh Bharat Cess, Krishi Kalyan Cess, Infrastructure Cess, etc. The rate of the deduction depends on the financial policy for a particular assessment year.

Tax Penalties

With taxes comes penalties. The government collects interest on tax payment as a form of penalty from a taxpayer.  Each of the taxes discussed above has a particular due date and if assesses failed to pay till the prescribed due date there is a penalty.

Penalties on TDS

Late Filing Fee – Section 234E: If TDS is not filed after the due date then it attracts a penalty of INR 200 every day from the due date until it is filed by the taxpayer.

Interest – Section 201A: Failing to deduct TDS till the due date attracts interest.

Penalty – Section 271H: penalty of a minimum of Rs. 10,000 under this section.

Prosecution – Section 276B: imprisonment for a minimum of 3 months under this section.

Penalties on Advance Tax

Non Payment of Advance Tax – Section 234B: Interest at 1% in case the taxpayer fails to pay 90% of their tax liability in same the financial year.

Delay in Payment of Advance Tax – Section 234C: if there is a delay in tax payment than interest @ 1% is applicable.

Penalties on Self Assessment Tax

Defaulting – Section 221(1): if a taxpayer fails to pay the tax within due date then the penalty amount decided by assessing officer needs to be paid by the taxpayer.

Paying Taxes in India

A taxpayer can either choose to pay taxes online or offline

Paying Tax Online

In order to pay tax online one has to go to TIN NSDL e-payment and select INTS 280 and enter the necessary details  

Paying Tax Offline

Visit the nearest bank branch and get the challan form i.e. form 280. Fill in the necessary details and submit the money and form to a bank official, for which one will get a receipt.

one can inquire about the status of income tax payment online by going to TIN NSDL e-payment and download challan status inquiry form.

FAQs

What is a surcharge?

A surcharge is an additional tax levied by a government on assessees whose income exceeds Rs 50 lakhs. The calculation of surcharge is on income tax and not the actual income. The rate applicable for surcharge depends on the policy for that particular assessment year.

What are the penalties under Advance Tax?

– Non Payment of Advance Tax – Section 234B: Interest at 1% in case the taxpayer fails to pay 90% of their tax liability in same the financial year
– Delay in Payment of Advance Tax – Section 234C: if there is a delay in tax payment than interest at 1% is applicable

What are the different types of penalties under TDS?

– Late Filing Fee – Section 234E: If TDS is not filed after the due date then it attracts a penalty of INR 200 every day from the due date until it is filed by the taxpayer
– Interest – Section 201A: Failing to deduct TDS till the due date attracts interest
– Penalty – Section 271H: penalty of a minimum of Rs. 10,000 under this section
– Prosecution – Section 276B: imprisonment for a minimum of 3 months under this section

Presumptive Taxation Scheme : Everything you need to know

What is Presumptive Taxation Scheme?

The presumptive taxation scheme was introduced by the Income Tax Act, 1961 to give relief to small taxpayers from the tedious job of maintaining books of account and from getting the accounts audited. Generally, a person who receives income from a business or profession maintains books of accounts and prepares a balance sheet to understand the financial position of their business or profession over the financial year.

Any individuals, HUF, or partnership firms who avail presumptive taxation scheme can declare income at a predefined rate. Thus, they need not go through the cumbersome task of maintaining books of accounts and audit. Following are the presumptive taxation schemes available to small taxpayers as per Income Tax Act:

  • Section 44AD for small businesses
  • Section 44ADA for professionals
  • And, Section 44AE for businesses engaged in plying, hiring or leasing of goods carriages

Presumptive Taxation Scheme for Business

This scheme is designed to give relief to small taxpayers engaged in any business from maintaining any books of accounts. However, it does not include the business of plying, hiring or leasing of goods carriages referred to in section 44AE. Further, the Income Tax Provisions for maintaining books of accounts under Section 44AA & Audit under Section 44AB will not apply. The following assessees can avail Presumptive taxation under section 44AD:

  • Resident Individual
  • HUF
  • Partnership Firm (not Limited Liability Partnership Firm)
ITR for Businesses u/s 44AD (Presumptive Scheme)
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ITR for Businesses u/s 44AD (Presumptive Scheme)
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Non-Resident Indians (NRI) can not avail of the benefit of this scheme. Also, a person who has made any claim towards deduction under section 10A/10AA/10B/10BA or under section 80HH to 80RRB in the relevant year is not eligible for this scheme.

Presumptive Taxation Scheme for Professions

Earlier professionals were kept out of presumptive taxation scheme. However, in budget 2016 the government has extended a presumptive taxation scheme to the professionals too. Hence, professionals can also opt for presumptive taxation under section 44ADA. This benefit is available from FY 2016-17 onwards.

ITR for Professions u/s 44ADA (Presumptive Scheme)
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An assessee in a specified profession having gross receipts up to INR 50 lacs, can opt for Presumptive Taxation under Section 44ADA. It saves them from the burden of maintaining books of accounts and go for tax audit as per Section 44AB.

Presumptive Taxation Scheme Under Section 44AE

The scheme of section 44AE is designed to give relief to small taxpayers engaged in the business of plying, hiring or leasing of goods carriages.

Eligible Business as per Section 44AE

  • A person who engages in the business of plying, hiring or leasing of goods carriages and who does not own more than 10 goods vehicles at any time during the year. Including carriages taken on hire purchase or no installments.
  • The provisions of section 44AE are applicable to every person (i.e., an individual, HUF, firm, company, etc.).

Characteristics of the Scheme u/s 44AE:

  • A taxpayer doesn’t have to maintain books of accounts under section 44AA.
  • Turnover from a business should not exceed INR 2 Crore (INR 1 Crore until FY 2015-16)
  • Net Income from a heavy goods vehicle will be taken as INR 7,500 per month for each vehicle
  • A taxpayer will not be able to claim any business expenses against the income.
  • Such a taxpayer should file Form ITR 4 on the Income Tax Website.

Round off part of a month to the next month. For instance, if you have owned a goods carriage for 7 months and 5 days, the net income shall be calculated as if the carriage was owned for 8 months.

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FAQs

Can a doctor opt for presumptive taxation scheme?

Yes. With effect from the Financial year 2016-17, any professional be it a doctor or a chartered accountant or a lawyer can opt for Presumptive taxation scheme u/s 44ADA. However, the only condition is that the income from such a profession should not exceed INR 50 lacs and profits will be taken as 50% of such professional receipts.

Which businesses are not eligible for presumptive taxation  scheme?

The scheme of section 44AD is designed to give relief to small taxpayers engaged in any business, except the following businesses:
1. Business of plying, hiring or leasing goods carriages as per Section 44AE.
2. A person who is carrying on any agency business.
3. A person who is earning income in the nature of commission or brokerage
4. Any business whose total turnover or gross receipts exceeds two crore rupees.​

Section 234C of Income Tax Act : Interest for Delay in Payment for Advance Tax

The due date for filing the ITR is always defined and if you miss the deadline to file your ITR, you might face the consequences like having to pay interest based on Section 234. The Penalty for Advance Tax delay in payment is levied under section 234C. Apart from that, there are two more types of interests under section 234

So, let’s discuss Section 234C in this article. Taxpayers can pay the advance tax in 4 installments during the Financial Year. However, if you still default, there are consequences in the form of an interest penalty u/s 234C. This interest u/s 234C is calculated for the delay/non-payment of advance tax during the year.

As mentioned above, the assessee has to calculate advance tax and should pay his Tax Liability for a particular Financial Year if the amount calculated is estimated to be INR 10,000 or more. As per the Income Tax Act, the assessee is required to pay advance tax in installments as mentioned in the advance tax due dates table below:

Due date of installment Advance Tax payable by Individual and Corporate Taxpayers
On or before 15th June 15% of the advance tax liability
On or before 15th September 45% of the advance tax liability
On or before 15th December 75% of the advance tax liability
On or before 15th March 100% of the advance tax liability


Advance Tax Filing (Quarterly)
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000 after TDS deducted
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So in case of short/no payment of advance tax, interest/penalty will be levied u/s 234C and it is calculated as follows:

Scenario Interest
If paid Less than 45% of advance tax up to 15th September 1% per month i.e. 3 months on the shortfall amount below 45%
Less than 75% up to 15th December 1% per month i.e. 3 months on the shortfall amount below 75%
Not 100% Up to 15th March 1% on the shortfall amount below 100% for 1 month

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For Example

Pratik is running a small shop. His tax liability is INR 45,000. He has paid advance tax as given below:

  • INR 21,000 on 15th September
  • INR 5,000 on 15th December
  • and, INR 15,000 on 15th March

Penalty for Delay in Advance Tax Under Section 234C of Income Tax Act

Installment Advance tax due
to be paid
Advance tax actually
paid till date 
Shortfall Interest
15th September
20,250
(45% of 45,000)
21,000 0 0
15th December 33,750
(75% of 45,000)
26,000
(21,000 + 5000)
7750 233
(7750 x 3 months x 1%)
15th March 41,500
(100% of 45000)
41,000
(21,000 + 5,000 + 15,000)
4000 40
(4000 x 1 month x 1%)
Total Int u/s 234c       273
Advance Tax Filing (Annual)
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FAQs

What is the difference between 234A, 234B and 234C?

– Interest u/s 234Aof Income Tax Act is levied on taxpayers if they delay in filing their Income Tax Return (ITR).
– The Interests u/s 234B of Income Tax Act is levied upon those taxpayers who default in payment of Advance Tax.
– Interest u/s 234C of Income Tax Act is levied upon those taxpayers who default in paying installments of advance tax.

Do salaried people have to pay advance tax?

​No. Since TDS is deducted from salary income by the employer no need to pay advance tax. However, for all the incomes other than salary, if the total of such incomes exceed Rs. 2,50,000 then they will have to assess the tax liability on the same and pay Advance Tax.

How do I determine whether I am liable to pay advance tax or not?

​Before every due date for payment of Advance Tax, you will have to calculate your expected annual income and determine the tax liability on the same. If your total tax liability exceeds Rs. 10,000 then you are liable to pay advance tax as per the schedule has given above.

How to pay advance tax?

​There are two ways of tax payment:
– Deposit in the bank with advance tax challan or
– Online payment using Net banking facility.

Section 234B of Income Tax Act : Interest for Non-Payment of Advance Tax

The government always declares the due date for filing the ITR and if you miss the deadline to file your ITR, you might face the consequences like having to pay interest based on Section 234. Hence, it is also important to know the advance tax due dates in order to avoid penalties for late payment. The interest penalty for non-payment of Advance Tax is levied under section 234B. Other than that, there are two types of interests under section 234:

So, let’s discussing Section 234B in this article. Section 234B is the penalty interest imposes on the taxpayers in case there is no advance tax payment during the year. Hence, the liability of payment of penalty u/s 234B arises after the end of the Financial Year till the date of filing of ITR. Calculation of the interest under section 234B takes place in the following cases:

  1. When no payment of advance tax takes place even though the taxpayer is liable to pay the same
  2. When the advance tax paid is less than 90% of the Assessed Tax.
    Assessed tax = (Total tax liability – TDS/TCS)
Advance Tax Filing (Quarterly)
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According to Section 208 of the Income-tax Act, the assessee has to calculate advance tax and pay if his Tax Liability of a particular Financial Year is INR 10,000 or more.

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Example of Penalty u/s 234B

Vijay is running a small business. His tax liability for the year is INR 32,500. He has not paid any advance tax till 31st March but he has a TDS credit of INR 5000. The entire tax was paid by him at the time of filing the return of income on 31st July.

In this case, since he has not paid any advance tax, interest will be calculated from the 1st day of the assessment year till the day of paying tax and filing his return.

So interest under section 234B = INR 27,500 i.e (INR 32,500 – INR 5000) x 4 months x 1% = Rs 1100

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FAQs

What is the difference between 234A and 234B?

The Interest u/s 234Ais levied on taxpayers if they delay in filing their Income Tax Return (ITR). While Interest u/s 234B of Income Tax Act is levied upon those taxpayers who default in payment of Advance Tax.

Do salaried people have to pay advance tax?

​In the case of salaried individuals, TDS is deducted from their salary and deposited to the government by their employer. So as far as salary income is concerned, they are not required to pay advance tax. However, for all the incomes other than salary, if the total of such incomes exceeds INR 50,000 then they will have to assess the tax liability on the same and pay Advance Tax.

How do I determine whether I am liable to pay advance tax or not?

​No. Since TDS is deducted from salary income by the employer no need to pay advance tax. However, for all the incomes other than salary, if the total of such incomes exceed INR 2,50,000 then they will have to assess the tax liability on the same and pay Advance Tax.

How to pay advance tax?

Deposit in the bank with Advance Tax challan or
Online payment using Net banking facility

Difference between Advance Tax and Self Assessment Tax

There are different types of tax payments which are given below. In this article, we will be taking a close look at the difference between the Advance Tax and Self Assessment Tax.

It is important to know the purpose of each Advance Tax payment and Self Assessment Tax payment because you have to select a particular type at the time of paying taxes.

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Advance Tax

Advance Tax is part payment of your tax liability before the end of the financial year. It is based on the principle of “pay as you earn”. As per the income tax act, every assessee whose tax liability for a financial year exceeds INR 10,000 is required to pay advance tax on an installment basis. There is an interest penalty in case the Advance tax is not paid before the end of the financial year.

While paying Advance tax through challan 280, you have to select (100) ADVANCE TAX as a type of payment.

Example

Prashant runs a small trading business. His expected annual profits for FY 2016-17 from trading is INR 10,00,000. Accordingly, his approximate tax liability will be INR 1,29,000. Since his total tax liability exceeds INR 10,000, he is required to pay advance tax on an installment basis. Prashant will have to pay advance tax before 31st March 2017 to avoid the interest penalty.

Advance Tax Filing (Quarterly)
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Self Assessment Tax

It is what the assessee pays after the end of the financial year. Before filing the income tax return, every assessee is required to calculate the tax liability. If there are any outstanding tax dues to be paid then it is to be paid first before filing Income Tax Return.

While paying Advance tax through challan 280, you have to select (300) self-assessment tax as a type of payment.

Example

Esha is a housewife and she also teaches school kids in her spare time. She earned approximately INR 3,50,000 In FY 2016-17 from tutoring. While filing her tax return, she calculated her tax liability at INR 5000. Esha has to pay this self-assessment tax of INR 5000 before filing her tax return.

Advance Tax Filing (Annual)
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FAQs

What if I don’t pay a self-assessment tax?

If you don’t pay self-assessment tax, you will not be able to file your Income Tax Return. Once you pay your self-assessment tax, you also need to provide counterfoil information in your return.

How to pay self-assessment tax?

There are two ways to pay self-assessment tax:
– Deposit in a bank with self-assessment tax challan or
– Online payment using Net banking facility

Do salaried people have to pay advance tax?

In the case of salaried individuals, TDS is deducted from their salary and deposited to the government by their employer. So as far as salary income is concerned, they are not required to pay advance tax. However, for all the incomes other than salary, if the total of such incomes exceeds INR 50,000 then they will have to assess the tax liability on the same and pay advance tax.

How do I determine whether I am liable to pay advance tax or not?

Before every due date for payment of advance tax, you will have to calculate your expected annual income and determine the tax liability on the same. If your total tax liability exceeds INR 10,000 then you are liable to pay advance tax as per the schedule has given above.

What if I don’t pay advance tax on time?

As mentioned above, if you fail to pay advance tax or make a late payment of advance tax, you will have to pay penal interest. Under section 234B, interest for default in payment of advance tax is levied at 1% simple interest per month or part of a month

Advance Tax : Rules, Calculations, and Due Dates

Advance tax is the “Pay as you earn”tax that has to be deposited to the Income Tax Department during the financial year. This ensures that the government can collect more uniformly throughout the year.

Latest Update as per Income Tax Department

The ITD will now send the taxpayers a mail with the details of the amount of advance tax that was paid over each quarter which would help the taxpayers to reconcile with their records for the same.

What is Advance Tax?

It is a part payment of your tax liability before the end of the financial year. Another name for it is – “pay as you earn scheme” where the income tax should be paid in the year in which the income is received.

Union Budget 2021 Update

Advance Tax liability would arise on dividend income only once the dividend is declared or paid since it is difficult for the shareholders to estimate the dividend income accurately.

Who is required to Pay Advance Tax?

Every person whose tax liability for a financial year exceeds INR 10,000 has to pay it on an installment basis. Income from all the different heads are added to calculate the advance tax.

Advance Tax Filing (Quarterly)
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000 after TDS deducted
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Advance Tax Filing (Quarterly)
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For Salaried individuals

In the case of a person having income from salary, the employer calculates the tax on salary. He is responsible to deduct tax (TDS) from your salary income and deposit the same to Government. So a salaried person does not have to pay this tax on salary income.

However, if a salaried person is having income other than salary (for eg. rental income from house property or interest from fixed deposits etc.), and if tax liability on such income exceeds INR 10,000 then the taxpayer has to pay advance tax. It is very common for salaried people to have alternate income sources and as a result, they would become liable to pay this tax.

For Presumptive Taxation

Up until FY 2015-16, assessees opting for presumptive taxation scheme were not required to pay advance tax. However, with effect from FY 2016-17 (AY 2017-18), assessees opting for presumptive taxation scheme will have to pay the tax amount in a single installment on or before 15th March. From FY 2016-17 (AY 2017-18), Freelancers and professionals can also opt for the presumptive taxation scheme and avoid the cumbersome tasks of maintaining books of account and audit.

The “Pay-as-you-earn” liability for the presumptive taxation scheme is to be calculated and paid only once before the end of the financial year. Here is how the tax should be calculated for the presumptive taxation scheme:

Assessee type Presumptive income Advance tax liability
Business owners 8% of Turnover or Gross receipts Tax at slab rates on presumptive income (flat 30% in case of partnership firm)
Professionals (Freelancers) 50% of professional fee receipts Tax at slab rates on presumptive income (flat 30% in case of partnership firm)

For Freelancers/professionals

Freelancers and professionals who do not opt for the presumptive taxation scheme have to calculate and pay this tax on an installment basis. They have to estimate their annual income and calculate the tax on the same because in most cases TDS which is deducted by their customers/clients while making payments, is not enough to meet the total tax liability.

Advance Tax Calculation

Time needed: 10 minutes.

  1. Estimate your income

    Estimate your income from business or profession. Add all the incomes from ongoing projects or assignments whose fees are already determined. Also, add the incomes which are expected on the basis of ongoing interactions with clients/customers.

  2. Subtract eligible deductions and expenses

    Deduct all eligible deductions such as tax-saving investments and payments (under the old tax regime) and expenses from your total estimated income.
    You can deduct the expenses which are directly related to your business or profession. Rent, electricity, legal and professional fees, books, fuel expenses, the salary of employees, depreciation, etc. are some of the expenses which are allowed to be deducted from the income.

  3. Calculate the tax liability

    Add incomes from remaining sources like house property, capital gains, income from other sources, etc. Then calculate the tax liability for your total income on the tax slab rates and deduct the TDS which has already been deducted from your income.

  4. Deduct Taxes Paid

    Refer to your Form 26AS and deduct all taxes paid such as TDS deducted and deposited on your behalf, previous advance tax installments paid during the financial year.

  5. Assess your tax liability

    If the resulting tax liability is more than INR 10,000 then you are required to pay advance tax on an installment basis as per the schedule given below.

Advance Tax Due Dates

Due date of installment Advance Tax payable by Individual and Corporate Taxpayers
On or before 15th June 15% of the tax liability
On or before 15th September 45% of the tax liability
On or before 15th December 75% of the tax liability
On or before 15th March 100% of the tax liability
Advance Tax Filing (Annual)
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000 after TDS deducted
[Rated 4.8 stars by customers like you]
Advance Tax Filing (Annual)
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000 after TDS deducted
[Rated 4.8 stars by customers like you]

FAQs

Do salaried people have to pay advance tax?

​In the case of salaried individuals, TDS is deducted from their salary and deposited to the government by their employer. So as far as salary income is concerned, they are not required to pay advance tax. However, for all the incomes other than salary, if the total of such incomes exceeds INR 50,000 then they will have to assess the tax liability on the same and pay tax.

How do I determine whether I am liable to pay advance tax or not?

​Before every due date for payment of advance tax, you will have to calculate your expected annual income and determine the tax liability on the same. If your total tax liability exceeds INR 10,000 then you are liable to pay it as per the schedule has given above.

How to pay advance tax?

​There are two ways of tax payment:
– Deposit in the bank with advance tax challan or
– Online payment using Net banking facility

What if I don’t pay advance tax on time?

​As mentioned above, if you fail to pay advance tax or make a late payment of it, you will have to pay penal interest. Under section 234B, interest for default in payment of advanced tax is levied at 1% simple interest per month or part of a month