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Advance Tax Payment

Advance Tax Payment

Nothing is more advantageous than paying off tax obligations in advance rather than deferring them until the end of the fiscal year. It is preferable to complete the arduous process of calculating and paying income tax as soon as possible. In contrast to annual lump sum tax payments, advance tax payment refers to income tax paid far in advance. Pay as you earn is another name for it. The procedure for paying taxes in advance is relatively easy.

What is Advance Tax Payment?

A percentage of the annual taxes can be paid in advance by paying advance tax. Income tax must be paid if the tax liability is more than Rs. 10,000 in a financial year. The tax must be paid in the same year you receive your income. As a result, it is also known as the "pay as you earn" plan.

When you have sources of income other than your pay, advance tax may be applicable. The notion becomes applicable, for instance, if you make money from investments that pay interest, capital gains, a business, a house or other property, or the lottery.

Any overdue refund will accrue interest of about 0.5% per month or 6% per year, as in the case of an income tax rebate. However, if the advance tax is not paid on time, you will be assessed a fee of 1% per month or 12% annually. Before the fiscal year finishes, the advance tax must be paid.

Are You Eligible to Pay Advance Tax?

People with tax liabilities of INR 10,000 or more must pay advance tax.

Even though many people pay advance tax yearly, only some are required to. The only people who are required to pay advance tax are those with a tax burden exceeding INR 10,000 each financial year. We make every effort to ensure that our clients fully comprehend their tax obligations so that they only have to pay the very minimum required as an advance tax payment.

The advance tax that both employees and business owners can pay

  • People of all professions and financial backgrounds are subject to the payment of advance tax.
  • Businesspeople, independent contractors, and salaried workers can pay advance tax.

How to Pay Advance Tax ?

On non-TDS deducted income from self-employment, professional services, businesses, capital gains, or any other source, a few easy steps must be followed. Through challan 280, people can pay advance taxes both online and offline. Challan 280 is typically used by a company's accounts section to pay advance tax. Advance taxes must be paid by the 15th day of every fiscal quarter. The financial year's quarter months are June, September, December, and March.

xAdvance Tax payments can be made through the National Securities Depository Limited or Income Tax Department portals. To pay their taxes online, taxpayers must have an account on these platforms. PAN is connected to the taxpayer's account. Aadhaar and PAN must now be linked as well. Additionally, PAN must be connected to every bank account. Debit or credit information from any taxpayer's bank account has been instantly linked to IT records via PAN.

Log on to the IT department portal to pay your advance tax online. Select Challan 280 from the Tax Information Network by logging in. Several different types of taxes are paid using Challan 280. Select "100 advance tax" from the list of options to pay the advance tax. Complete the PAN Card by entering your name, address, phone number, and other personal information. Enter the captcha code to continue and use the secure payment gateways for net banking or debit cards. The portal will produce a receipt for the payment of advance tax. Snap a picture of the receipt or save it. The receipt will be necessary to submit IT returns for the fiscal year during the assessment year.

Advance tax pay Offline

Additionally, advance tax payments can be made at bank locations approved by the IT department to receive them. On challan 280, accessible at the branches, the taxpayer may pay their advance tax. The taxpayer must thoroughly complete all applicable sections and check all applicable boxes on the form. You can submit the form and advance tax payment at the specified counter in cash or by check. The taxpayer should ensure that they receive a receipt from the counter for their advance tax payment. A taxpayer can make an advance tax payment at

  • Syndicate Bank
  • SBI
  • ICICI Bank
  • HDFC Bank
  • PNB
  • RBI,
  • Other banks, which all are authorised.

How to Calculate Advance Tax Payment?

Using the techniques and advice provided below, you may quickly determine how much advance tax you must pay:

Step 1: Determine an estimate of your income for the fiscal year you are calculating advance taxes for. The following heads of revenue should be considered when calculating income:

  • Any interest from savings accounts, FDs, or other investments.
  • Monetary Gains
  • Income from any Profession
  • Income from any rental
  • If minors' earnings are included in the taxpayer's income
  • Any other income

Step 2: The gross taxable income is calculated by adding your salary to the amount shown above (while advance tax is not applicable on your salary, the total may change your tax slab which will change the tax liability further)

Step 3: Apply the most recent income tax slab that applies to you to the tax due calculation.

Step 4: Deduct the TDS that will be or has already been deducted under the TDS slab.

You must pay advance tax if your tax liability after deducting TDS exceeds Rs. 10,000.

Calculation of Advance Tax - Example

To figure out how much advance tax you must pay, you can either manually calculate or utilise an advance tax calculator. To determine the amount of your advance tax payment, one can refer to the example below:

Let’s Assume:

  • Annual Gross Income: Rs.10,00,000
  • Expenses (Estimate): Rs.3,00,000
  • PPF: Rs.25,000
  • LIC Premium: Rs.15,000
  • Medical Insurance: Rs.5,000
  • TDS (Estimate): Rs.15,000
  • Fixed Deposit Interest: Rs.5,000
Advance Tax (Estimate)Amount
Gross IncomeRs.10,00,000
Fixed Deposit InterestRs.8,000
Gross Total IncomeRs.7,08,000
PPF ContributionRs.25,000
LIC PremiumRs.15,000
Medical InsuranceRs.5,000
Payable TaxRs.58,000
Education CessRs.1,684
Advance Tax to be PaidRs.44,684

Advance Tax Due Dates

Entities and businesses that employ independent contractors must pay a minimum percentage of their tax obligations by the deadlines.

Self-employed people and businesses must pay up.

  • By September 15 of the fiscal year, at least 30% of the tax is due
  • Before December 15 of the fiscal year, at least 60% of the tax is due
  • 100% of the tax is due by March 15 of each fiscal year.
Self-Employed and Individuals Business Need to pay up
Due Date (Advance Tax Payment)Amount to be Pai
On September 15 or before30%
On December 15 or before60%
On March 15 or before100%

Both businesses and individuals must pay.

  • 15% or more of the tax due by June 15 of each fiscal year
  • Before September 15 of the fiscal year, at least 45% of the tax due
  • By December 15 of the fiscal year, at least 75% of the tax due
  • 100% tax liability by March 15 of FY
Companies and Individuals Need to pay up
Due Date (Advance Tax Payment)Amount to be Paid
On June 15 or before15%
On September 15 or before45%
On December 15 or before 75%
On March 15 or before 100%

Advance Tax Late Payment and Interest

According to Section 234B of the Income Tax Act, you will be levied interest at a rate of 1% per month if the advance tax you have paid is less than 90% of the assessed tax. Until the tax is fully paid off, interest is calculated at a rate of 1% per month on the defaulted amount. You'll be subject to the same interest penalty if you don't make a payment by the second or third deadline.

You will be assessed a 1% interest fee under Section 234C of the Income Tax Act if you don't pay your advance tax instalment on time.

Exemption in Advance Tax Payments

Seniors and individuals who use presumed methods are excluded from paying advance taxes.

  • Elderly people 60 years of age and older are excused from paying the advance tax.
  • The advance tax is not due from salaried people who fall inside the TDS net. However, the advance tax will be charged on any earnings derived from sources, including interest, capital gains, rent, and other non-salary income.
  • One does not need to pay the advance tax if TDS deducted exceeds the tax payable for the year.

Pros and Cons of Advance Tax Payment

Advance tax payment has a strong personality with few weaknesses and many advantages. The following benefits of paying advance tax payments are listed:

  • By paying their taxes in whole and on time in advance, taxpayers lessen their stress.
  • An advance tax payment can be made offline or online by the taxpayer.
  • The early payments prevent someone from becoming overwhelmed by the burden of taxes.
  • It expedites the tax collection procedure.
  • By paying interest on the advance tax, it also raises money for the government.
  • It prevents someone from defaulting on their obligations.
  • It helps businesses manage their finances by giving them information about the annual revenue generated.

Individuals who must make advance tax payments are strongly recommended to do so on time, with accurate financial records and calculations. Failure to do so will result in the following unfavourable consequences:

  • A 1% penalty will be applied if a taxpayer does not pay their advance tax payment or makes a payment that is less than 90% of what is owed before the final due date.

Refund in Advance Tax Payment

If the Income Tax Department discovers at the end of the fiscal year that you have paid more tax than you should have, the IT department will reimburse the excess amount. The taxpayers can request their reimbursement by submitting Form 30. The taxpayer must submit a claim within a year of the previous assessment year.

Your Assistant for Paying Advance Tax?

While paying advance tax might appear relatively simple, this is not the case. Chartered accountant services offer their clients professional knowledge, enabling them to make advance tax payments at the conclusion or the beginning of the fiscal year without difficulty or bother. The highly skilled specialists make every effort to ensure that the tax calculations benefit the clients in the best possible way.