With over 80 million tax filers for income tax in India, questions often arise around the Advance Tax payment. To efficiently carry out the process of Advance tax filing and payment, you need to be thoroughly aware of various aspects like the basics of the Advance Tax payment and its calculation. Read on to find out more!

Understanding the Concept of Advance Tax Payment

In Section 208 of the Income Tax Act 1995, a taxpayer is liable for paying the Advance Tax during the financial year keeping in alignment with the due dates set by the Income Tax department. For income received through means of capital gains like the sale of a capital asset or rent from a property, Advance Tax is payable. This form of tax payment is done in installments, and if there is an increase or decrease in the income, then the Advance Tax is calculated based on that. 

A self-employed or salaried individual is liable to the Income Tax Advance Tax payment.  The Advance Tax is due by anyone with an estimated tax liability of more than Rs.10,000 in a given financial year. However, senior citizens aged 60 or above are exempted from paying this tax. 

Advance Tax: Understanding the due dates 

As mentioned above, the Advance Tax payment is payable in installments over the financial year.  Let’s take the Financial Year 2022-2023 as an example. The following table portrays the Advance Tax payment due date a company should abide by. 

You as a taxpayer are liable to stick by these due dates and either pay on or before the set dates. However, companies that have opted for a presumptive tax are required to pay the whole Advance tax amount on or before 15th March, and the installment due dates do not apply to them. 

Calculation and Payment of Tax 

Advance tax calculation can be carried out smoothly. However, many queries revolve around the calculation of this tax. You can go through the following steps to get a clear idea of how the calculation is done.

• The first step while calculating the Advance Tax is to calculate the total amount of income earned from different sources like rental property, any interest earned, or lottery winnings. Next, add your monthly salary figure to the above-calculated amount. Now, the amount you have is your total gross income. 
• After this, you must calculate the tax payable by complying with the current tax slabs. 
• As the next step, deduct the TDS applicable to your net amount. 
• Analyze the amount of income after the TDS deduction. If it exceeds ₹10,000, then you are liable to pay the Advance Tax. 

How to pay Advance Tax?

You can pay the Advance Tax through both online and offline modes. For Advance income tax payment online, go through the following steps: 

1. Visit the official website of the IT department - https://incometaxindia.gov.in/Pages/tax-services/pay-tax-online.aspx
2. Select the required challan number; with respect to Advance tax payment, select Challan 280. 
3. Fill in the correct details in the form. 
4. After filling in the details, on the next page, you will be directed to net banking, where you can recheck the amount for Advance tax and pay it. 
5. Make sure to save the payment challan when filing your income tax return.

If you want to opt for the offline method of filing your advance tax, you can submit the challan at the respective bank branches authorized by the IT department. 

Conclusion 

It is important that you know the criterion and steps for filling out your Advance Tax payments. Also, by duly complying with the dates of the advance tax payments, you can efficiently manage your finances and keep track of the total income earned during the financial year.

Frequently asked questions

1. Does an NRI have to pay advance tax?

Yes, you are liable to pay the advance tax if you have an income of more than ₹10,000 after the TDS deduction. 

2. What is the penalty for not paying the advance tax?

If the payment of the advance tax is not made by the end due date, then a penalty of 1% is charged.