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Advance tax is payable if the tax liability of a business is equal to or more than Rs.10,000 after TDS payment in a fiscal year.
Paying advance tax is beneficial for both, businesses and the government. For businesses, it eases the year-end burden of paying tax lumpsum. On the other hand, it offers a continuous flow of income to the government throughout the year.
Thanks to the internet, you can now pay advance tax online in a few simple steps. If you are a business owner trying to figure out how to pay it online, you’ve landed in the right place.
But, to start with, let’s set some context.
What is Advance Tax Payment?
Advance tax payment refers to paying income tax in advance during a financial year rather than paying it at the end. The Income Tax Department prescribes cutoff dates before which advance tax payments must be made during the year.
It is also called “pay as you earn” tax since the payment is made in instalments during a financial year.
I-T Department has authorised the branches of several banks to receive advance tax payments on behalf of the government. To pay this tax, you either can visit said branches, or make the payment online.
How to Pay Advance Tax Online?
Follow these steps after visiting the e-payment facility on the official web portal of the Income Tax Department:
Step 1: Select the option for tax applicable as – (0020) Corporation Tax (Companies).
Step 2: Choose the type of payment as – (100) Advance Tax.
Step 3: Select your preferred month of payment.
Step 4: Input PAN, Assessment Year, email address, contact number, address, and other necessary details. Then select proceed. After you do that, the page will redirect you to a payment gateway or a net banking page, based on your payment mode.
Step 5: Make the payment. Save a copy of the payment challan for when you’re filing the ITR for your business.
Who is Liable to Pay Advance Tax?
Any individual, Hindu Undivided Family, Association of Persons, Body of Individuals, Company, and Local Authority who is liable to pay income tax and whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance, in the form of advance tax.
Advance Tax Payment Online for FY 2023–24
Advance tax payments for the FY 2023–24 can be paid online through the official website of the Income Tax Department.
➡️To make the payment, taxpayers will need to log in to the e–filing portal using their user ID, password, and date of birth.
➡️Once logged in, taxpayers will need to select the ‘e–Pay Tax‘ option and then choose the ‘Advance Tax‘ payment option.
➡️The taxpayer will then need to enter the amount to be paid and choose the appropriate payment mode.
➡️After submitting the payment, the taxpayer will receive a confirmation receipt that should be retained for future reference.
Advance Tax Payment Due Dates
Apart from knowing how to pay advance tax online, you must also remember the due dates for payment of advance tax for companies and individuals.
Advance Tax Payment Due dates for Corporate Tax Payers
|Sl. No.||Amount of tax payable||Due date for Tax Instalment|
|1||At least 15% of advance tax liability||Either on or before 15th June|
|2||At least 45% of advance tax liability||Either on or before 15th September|
|3||At least 75% of advance tax liability||Either on or before 15th December|
|4||100% of advance tax liability||Either on or before 15th March|
Trivia: Business owners who have registered the business organisation or startup under the presumptive taxation scheme outlined in Sections 44ADA and 44AD of the IT Act do not need to pay advance tax, given the income for a financial year is within a threshold of Rs.2 crore.
Advance Tax Payment Due dates for Individual Tax Payers
|Sl.No.||Amount of tax payable||Due date for Tax Instalment|
|1.||At least 15% of advance tax liability||Either on or before 15th June|
|2.||At least 45% of advance tax liability||Either on or before 15th September|
|3.||100% of advance tax liability||Either on or before 15th March|
How to Calculate Advance Tax Dues?
You know what advance tax is. You know how to pay it online. You even know when to pay for it.
The next big question is: how much tax do you have to pay?
The advance tax calculator on the official web portal of the Income Tax Department can help you calculate your tax dues. Just fill in the various required fields on the calculator with your details to compute your taxes.
Some of these fields include – the type of taxpayer, net taxable income, surcharge, whether the organisation has opted and qualifies under section 115BA or 115BAA or 115BAB, etc.
You can also compute advance tax liability manually using these steps.
Step 1: Determine earnings for a given year.
Step 2: Calculate gross taxable earnings for a given year.
Step 3: Calculate the payable tax amount according to the applicable tax slab.
Step 4: Now, subtract the TDS amount that is deducted or the TDS, which will be deducted as per the tax slabs for different earnings.
If the tax liability at any time after the deduction of TDS exceeds Rs.10,000, they should adhere to the advance tax payment guidelines.
Advance Tax Calculation-Example
Let us assume that Mr Sharma has an income of Rs. 10,00,000.
|Gross Income||Rs 10,00,000|
|Fixed Deposit Interest||Rs 50,000|
|Gross Total Income||Rs 8,50,000|
|PPF Contribution||Rs (10,000)|
|LIC Premium||Rs (5,000)|
|Medical Insurance||Rs (5,000)|
|Payable Tax||Rs 53,040|
|Education Cess||Rs 1,684|
|Total Tax||Rs 54,724|
|Advance Tax to be Paid(Total Tax- TDS)||Rs 34,724|
Advance Tax Challan
The Advance Tax Challan is a form used by taxpayers to deposit their Advance Tax amount while filing their taxes.
➡️It is an important document, as it is used to pay the advance tax amount that a taxpayer owes to the government.
➡️The Advance Tax Challan has to be filled out and submitted to the Income Tax Department along with the Advance Tax payment.
➡️The information provided on the form includes the taxpayer‘s name, PAN number, address, and the amount of Advance Tax that is being paid.
➡️It also includes details about the bank where the payment is being made, the bank account number, and other relevant details.
Advance Tax Payment – Benefits
Let’s have a look at the benefits of advance tax payment.
1. Reduce Tax Liability: One of the primary benefits associated with advance tax payments is that it can help to reduce the taxpayer’s overall tax liability. By making advance payments, the taxpayer can reduce their total tax burden by spreading out the payments over a longer period. This can also help to reduce the amount of interest and penalties that may be assessed if the taxpayer cannot pay their taxes in full at the end of the year.
2. Avoid Fines and Penalties: Making advance tax payments can also help taxpayers avoid potential fines and penalties that can be imposed if taxes are not paid on time. By making advance payments, taxpayers can ensure that taxes are paid in full and on time, which can help to avoid these costly fines and penalties.
3. Provide Financial Security: Making advance payments also provide taxpayers with additional financial security. By making advance payments, taxpayers can be sure that their taxes are paid in full and on time, and that they will not face any unexpected financial repercussions if their taxes are not paid in full by the end of the year.
Advance Tax Payment Refund
Advance Tax Payment Refund is a refund of any overpayment of advance tax. Let’s have a look at how you can claim your refund.
1. Log in to your online banking account or visit your local bank branch.
2. Download the Advance Tax Payment Refund Form from the Income Tax Department‘s website.
3. Fill out the form and provide all the required details like your PAN number, the amount of advance tax paid, the assessment year, etc.
4. Submit the form to your bank, along with any other documents required.
5. The bank will verify the information and initiate the refund process.
6. You may receive the refund amount in your bank account within a few days.
How to Pay Advance Tax Online With RazorpayX
Ever dreaded the thought of having to enter your details manually over and over again, and paying taxes on buggy government portals?
RazorpayX Tax Payments has got your back.
Follow along and learn how to pay advance tax online with RazorpayX, in just 4 simple steps.
Step 1: Set up your advance tax by logging into your RazorpayX dashboard, selecting “tax payments” from the menu and heading to the “Advance Tax” tab. Then, enter your basic business details.
Step 2: To make the payment, click on “ + Advance Tax” in the Advance Tax tab and confirm your details in the “Adding Filing Details” window. Click “Next” to proceed.
Step 3: Add the amount of tax that you need to pay. You can input a detailed break-up of the tax amount payable using the “Show all fields” menu.
Step 4: Click on “Pay Now” to proceed with the payment, or “Save Payment” in case you want to get back to the payment later.
- If you want to “Pay Now”, just enter the OTP and complete the payment.
- If you select “Save Payment” then enter the OTP for verification, and click CREATE PAYOUT to save the payout. The payout is created and can be seen on the Advance Tax screen.
Once you’re done, you can view the challan, too.
Yep, that’s all!
Don’t miss out on the smoothest tax payments experience in town. Check out RazorpayX Tax Payments now!
Frequently Asked Questions
What will happen if the advance tax paid exceeds the total tax liability?
If the advance tax paid exceeds the total tax liability, the extra amount will get refunded. If the advance amount surpasses 10% of the tax liability, the IT Department will pay an interest of 6% p.a.
Is there any penalty applicable for non-payment or deferred payment of advance tax?
Yes. A penalty is imposed for non-payment or deferred payment of advance tax within the scheduled time frame. Penal interest is levied under Section 234B and 234C of the Income Tax Act, 1961 for non-payment and deferred payment of the advance tax.