Income tax payment is one of the major sources of revenue for the government. These payments are further utilized for public welfare and infrastructure projects and the central government has a right to collect such tax payments. If taxpayers fail to make the required income tax payments they will face unfavorable consequences such as interest or penalty.
Types of Income Tax Payment
TDS
As the name suggests Tax Deducted at Source is a way to deduct taxes on income when it is generated. This was introduced in order to prevent tax evasion as the responsibility to deduct is on the payer. Accordingly, a person (deductor) responsible for making specified payments to any other person (deductee) is liable to deduct a certain percentage of tax (TDS) before making full payment to the receiver. This tax is deposited with the government by deductors on behalf of deductees.
The tax deducted is reflected in Form 26AS or in the certificate issued by the deductor.
Basically, it is applicable to payments like salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc. Also, the deduction depends on the payment limits and rate (which varies by the nature of payment) prescribed by the Income Tax Act.
Advance Tax
Advance income tax payment is a concept of paying a part of the estimated tax liability in advance before the actual tax payment is due. Any taxpayer whose tax liability is INR 10,000 or more is liable for Advance tax payment on or before the due dates and it is done in 4 installments throughout the year. The taxpayers under the presumptive taxation scheme will have to pay their due before 15th March.
According to the IT Act, income is taxable at the special rate or slab rate. Hence, the taxpayer needs to determine the total taxable income by applying the applicable rate. Moreover, the advance tax amount will be derived by deducting taxes that have already been paid via TCS, TDS, etc.
Self Assessment Tax
As the word suggests Self Assessment Tax is a tax liability that is computed and paid by the taxpayer themselves instead of being deducted at the source. If a taxpayer’s tax obligations are less than the sum of advance tax and TDS, they don’t need to pay any tax.
Surcharge: A Tax on Tax
A surcharge is an additional tax levied by a government on assessees whose income exceeds INR 50 lakhs in the case of individuals and Rs 1 crore in the case of companies. The surcharge calculation is on the income tax and not on the actual income. Altogether, there are slab rates for surcharges depending on the total taxable income of the taxpayer for the relevant assessment year.
Cess: A Fundraising Tax
The government collects cess for special causes like education, health, etc. 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 on Regular Assessment
Every person has to correctly calculate and pay taxes. If the IT department discovers that less tax has been paid than the actual tax liability, it takes action to determine the correct amount of tax that should have been paid ideally. Hence, tax on regular assessment is the demand placed on such a person.
It needs to be paid within 30 days of receiving the notice of demand.
Other receipts
According to the Income Tax Department, it is mandatory that the taxpayer’s PAN & Aadhar is linked. If that is not the case, they will have to pay a penalty of INR 1000 via challan 280 under other receipts (500).
Note- The last date to link PAN & Aadhar is 30th June 2023. Post this, unlinked PAN shall become inoperative.
Tax Penalties
Each of the taxes mentioned above has a deadline, and if an assessee misses the deadline, there is a penalty. Let’s go through some of the penalties below:
Penalties on TDS
| Penalty/Interest | Consequences |
| 234E | Imprisonment for a minimum of 3 months and a fine are levied if the deductor fails to pay the credit to the government. |
| 201A | Interest is imposed if the deductor fails to deduct TDS or deduct TDS but fails to deposit to the government till the due date. |
| Section 271H | If the deductor/collector files an incorrect return, a minimum penalty of INR 10,000 is levied. |
| Section 276B | Imprisonment for a minimum period of 3 months and a fine are levied if the deductor fails to pay the credit to the government. |
Penalties on Advance Tax
| Penalty/Interest | Consequences |
| Section 234B | Interest at 1% per month is levied in case there is no payment or taxpayer fails to pay 90% of their assessed tax liability during the assessment year |
| Section 234C | Interest at 1% per month is levied in case of deferment of tax during the financial year. |
Penalties on Self-Assessment Tax
| Penalty/Interest | Consequences |
| Section 221(1) | If a taxpayer is in default in payment of taxes an Assessing officer may levy a penalty in such a case in addition to the amount of arrears and interest from time to time. |
Paying Taxes in India
A taxpayer can either choose to pay taxes online or offline:
Online Income Tax Payment
In order to pay income tax online, go to the IT portal and enter the necessary details.
Moreover, taxes can be paid either via logging in or without logging in to the IT portal.
Offline Income Tax Payment
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.
FAQs
TDS, Self-assessment, Advance tax, Tax on regular assessment, etc are major types of income tax payment.
A surcharge is an additional tax levied by a government on individuals whose income exceeds Rs 50 lakhs. The logic is that people earning high incomes pay higher taxes. The surcharge calculation is on income tax and not the actual income.
Yes. You can file an ITR without paying taxes. However, the return will be processed with the demand due along with interest.
Taxpayers can use the income tax portal to make an online payment of Income Tax.