Being a responsible citizen requires you to pay your taxes on time. Income tax advance tax is tax taxpayers must pay in advance. The taxpayer that pays income tax in advance on their estimated income is known as advance tax. Another name for it is "pay-as-you-earn tax. Everything you need to know about advance tax payments in India will be covered in this blog post.
What is Advance Tax?
A tax called advance tax is one that taxpayers pay on their estimated annual revenue in advance. Another name for it is "pay-as-you-earn tax." The amount of the advance tax is paid in instalments, and it is determined on the basis of estimated annual income. Individuals, businesses, and firms all pay the income tax advance tax.
What are the Advantages of Advance Tax Payment in India?
- The speed of tax collection fastened up.
- Chances of missing a tax payment decrease
- Funds for the government rise as interest on the collected amount is paid to the government.
- The lack of funds or late tax payments is not a concern for taxpayers.
Who Is Eligible For Income Tax Advance Tax Payment?
If a person, business, or organisation expects to owe more than Rs. 10,000 in taxes for the year, they are eligible for income tax advance tax payment. The taxpayer is exempt from paying advance tax if the projected tax due is less than Rs. 10,000.
Due Dates for Income Tax Advance Tax Payment
The scheduled dates for advance tax payment in India are as follows:
- 15% of the estimated tax liability- paid by June 15.
- 45% of the estimated tax liability- paid by September 15
- 75% of the estimated tax liability- paid by December 15.
- 100% of the estimated tax liability- paid by March 15.
How to Calculate Advance Tax Payment Online?
The taxpayer must estimate their annual income and determine their tax liability in order to calculate advance tax payment online. The tax obligation is determined based on the taxpayer's applicable income tax slab rates. To determine their tax liability, the taxpayer can use the income tax calculator on the website of the Income Tax Department.
How to Make Advance Tax Payments in India?
The taxpayer has the option of advance tax payment online or offline. The taxpayer can go to the Income Tax Department website and choose the appropriate option to pay advance tax online. The taxpayer can pay advance tax offline by filling out a challan form in person at the specified bank.
Can advance tax be paid online?
Yea, Advance Tax Payment in India is paid online. Taxpayers can calculate their advance tax liability and make the payment online by going to the Income Tax Department of India's e-filing portal or by taking the help of online legal service-providing firms like Lawgical India.
How To Make The Advance Tax Payment Online?
Taxpayers can also complete the steps listed below to pay income tax advance tax online:
- Visit the Income Tax Department of India's e-Pay Tax portal at https://www.incometax.gov.in.
- Select the relevant challan, such as ITNS 280, ITNS 281, ITNS 282, ITNS 283, ITNS 284 if necessary, or Form 26 QB demand payment (only for TDS on property sale).
- Put in your PAN or TAN (as appropriate) and any other information required for the challan, such as the taxpayer's address, the bank where the payment will be made, and the accounting head under which the payment is made.
- Verify the transaction and save the payment receipt.
How can I confirm that the Income Tax Department has received the "Advance Tax Paid"?
To do this, verify that the payment amount appears in your 26 AS after you make the payment. To see Form 26AS, select the option after logging into your income tax department account on the ITD website.
Usually, it takes 6-7 days to update on 26AS.
Important Forms for Advance Tax Payment in India
File the Challan No. Properly on the specified due dates. ITNS 280. Pre-requisites of Challan No. ITNS 280 are:
PAN Details: Update accurate PAN information with care; else, your tax will be placed in someone else's name.
Assessment Year: Because the tax is being distributed in advance for the following fiscal year, please choose the right assessment year for payment.
Choosing the type of payment: The taxpayer must choose the form's payment type. It would be an advance tax if paid for the same fiscal year using the projected income. The self-assessment tax would apply if the tax were paid after the fiscal year ended.
You will receive a Challan Identification Number (CIN) following the payment. Remember this and use this CIN when submitting your income tax return. Additionally, confirm once the IT department has received the online payment using ITNS 280.
Consequences of Advance Tax Non-Payment
The following are the effects of not paying advance tax payment in India:
Interest: Under sections 234B and 234C of the Income Tax Act, the taxpayer will be obliged to pay interest if they fail to pay income tax advance tax or pay less than the appropriate amount. Interest is computed at a rate of 1% per month on the amount of tax owed.
Penalty: If advance tax is not paid or is paid at a rate that is lower than the permitted rates, the taxpayer is subject to penalties under sections 234B and 234C of the Income Tax Act. The amount of the unpaid advance tax is used to calculate the penalty interest. Interest is added to the amount of the unpaid advance tax if there is a gap.
No benefit of extended due date: If the taxpayer does not pay advance tax, the extended due date benefit is not available to them. However, if the tax is paid after the due date but on or before June 30, 2020, any late payments will be subject to interest at the lower rate of 0.75 % for each month or portion thereof.
Conclusion
Being an accountable citizen requires paying taxes in advance. To avoid any fines or interest, estimating your revenue for the year is crucial as paying any taxes due in advance. To determine their tax liability, the taxpayer can use the income tax calculator on the website of the Income Tax Department. The taxpayer has the option of paying advance tax offline or online. To avoid fines or interest, paying advance tax on time is crucial.
