By Adv Akshay Kshirsagar on 05th October 2022
Advance tax is a process of paying taxes on your earnings before the end of the financial year. This allows you to make a payment in installment rather than having to pay all of your taxes at once. But you will need to file your return and pay any outstanding taxes at the end of the financial period.
Example – Mr X is a salaried individual with tax liability of Rs. 1,00,000 from which Rs.80,000 is TDS deducted by employer. His net tax liability is Rs.20,000 so, Mr. X is liable to pay advance tax.
Any amount paid u/s 211 on or before 31st March of the previous year, shall be treated as advance tax paid during the financial year. Advance tax is payable on income earned during the current financial year only if your net tax liability exceeds Rs.10,000/-
Making advance tax payment online through the NSDL portal is easier than ever before. So let’s find out how to do it here!
Any Individual, HUF, Freelancer, Professional or business whose total tax liability is Rs 10,000 or more in a financial year have to pay advance tax. However, senior citizens and super senior citizen not having professional or business income are exempt from paying advance tax.
One needs to pay 100% advance tax liability before 15 March of every financial year. If your tax liability exceeds Rs.10,000 then you are also be liable to pay interest u/s 234 of Income Tax Act 1961.
Section 234B is interest for default in payment of advance. It is charged @ 1% per month on tax liability. Interest is calculated from 1st April of next financial year to the date on which such tax liability is due.
Interest under section 234C is levied on short of tax as per given installment. And is levied @1% on such short fall. Below is table of Installment chart.
To make advance tax payment online, follow the steps given below:
1. Visit NSDL portal and procees with challan number ITNS 280.
2) Select Tax Applicable (0021) for corporate tax payment and (0021) for Income-Tax (Other Than Companies).
(a) Click (100) Payment of Advance tax as a type of payment.
(b) Choose the mode of payment (debit card or net banking) and the bank through which the payment has to be done.
(c) Enter your pan number.
(d) Select Assessment Year (do not get confused bet AY and FY. Please select carefully).
(e) Fill in your contact details and address
(f) Enter captcha code and click on proceed.
3) You will then be redirected to the bank’s website to complete the payment. Fill the tax amount under respective head that is under Advance Tax.
4) After successfull payment, challan is generated through bank, on which you can see the payment details. You can download challan save it for future use or same is reflected in your 26AS in 5 working days.