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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 taxes 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. 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.
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.
|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.
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 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.
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.