There can be nothing better than paying off tax dues in advance than keeping such payments reserved for the end of the financial year. Calculating and paying income tax is always a tedious procedure and it is better to get over with this sooner rather than later.
Advance tax implies the income tax that is paid well in advance, in lieu of lump sum tax payments made at the year end. It also goes by the phrase pay as you earn. The process associated with advance tax payment is not too complicated.
Such payments have to be carried out in the form of instalments, the due dates of which are decided upon by the department of income tax.
Advance Tax Payment refers to making the payment of a portion of your annual taxes in advance. It is the income tax, which is payable if the tax liability goes beyond Rs. 10, 0000 in a fiscal year. You should pay this tax in the year in which you receive your income. Therefore, it is also called the ‘pay-as-you-earn’ plan.
The applicability of advance tax comes into picture when you have sources of income other than your salary. For example, if you’re earning through interest on investments, capital gains, business, house property, lottery, the theory becomes relevant.
Any due refund brings you an interest of around 0.5 %on a monthly basis, or, 6 % on an annual basis, as in the event of the income tax rebate. Nevertheless, if the advance tax is not paid on time, you’ll be charged 1 % each month, or 12 %every year.
Advance tax is to be paid before the fiscal year ends.
Advance tax is paid by people with tax liabilities of INR 10,000 or more
While advance tax is very commonly paid every year by several people, not all are expected to make such tax payments. Only those who have a tax liability that is more than INR 10,000 in every financial year are expected to make a payment of advance tax. We do everything in our capacity to make our customers understand exactly what their tax liabilities are so that they never have to pay more than the bare minimum needed as advance tax payment.
Advance tax that can be paid by both salaried and business persons
Presumptive Schemes Extended of Late to Salaried Professionals
You can pay the self-assessment taxes or the advance tax on 15th of March, September, and December, in instalments of 40 %, 30 % and 30 %, respectively, for the non-corporates. Corporates have to pat it on 15th of March, June, September, and December.
While the companies deduct the TDS on salaries, you can make advance tax payment on the income, which has not been subjected to the TDS.
Advance tax payment on non-TDS deducted income from self-employment, professional service, business, capital gains or any other source, require few simple steps. Individuals can pay advance taxes online or offline through challan 280. Advance tax payment of companies is usually carried out by their accounts section using challan 280. Advance taxes have to be paid by the 15th of each quarter of the financial year. The quarter months of the financial year are June, September, December, and March.
Advance tax payment can be done online through the Income Tax Department portal or through National Securities Depository Limited portal. Taxpayers need to have an account on these portals to pay their taxes through online mode. The account of the taxpayer is linked with PAN. It is now mandatory to also link Aadhaar with PAN. All bank accounts also need to be linked with PAN. Debit or credit data in any bank account of the taxpayer has immediately linked to IT records through PAN.
To pay online advance tax, log on to the IT department portal. Access tax information network and select challan 280. Challan 280 is used for payment of several kinds of taxes. To pay advance tax select ‘100 advance tax’ under the listed items for selection. Fill out all necessary details of PAN Card, address, contact number and other personal details. Enter captcha code to proceed and pay through net banking or debit card secure payment gateways. The portal will generate a receipt of advance tax payment. Take a snapshot of the receipt or save the receipt. The receipt will be required for filing IT returns for the financial year in the assessment year.
Advance tax payment can also be made at bank branches authorized by the IT department for collecting advance tax payments. The taxpayer can make advance tax payment on challan 280 available at the branches. The taxpayer should carefully fill the relevant sections and check the relevant boxes on the form. Advance tax payment cash or cheque along with form can be submitted at the designated counter. The taxpayer should make sure to get an advance tax payment receipt from the counter. A taxpayer can make an advance tax payment at
Self earning entities including professionals like doctors, lawyers, architects, and business entities can pay tax as they earn. Self-employed entities can make advance tax payment in three installments before 15th of September, December, and March of FY. Advance tax liability for the period is computed by applying the tax slab rates pro rata. It is best to make advance tax payment on actual income already released and net income projections. Paying advance taxes on income projections may require complicated adjustments and revisions.
For example, if a self earning entity generates a yearly income of Rs. 1 crore then high tax liabilities accrues each quarter. The entity can pay tax on the amount earned in each quarter by the due dates. In this case, business income of Rs 25 lakhs will be subjected to pro rata tax slabs each quarter.
Self-employed business and professional entities and companies need to clear a minimum percentage of tax liabilities by the due dates.
Self-employed and business entities need to pay up
Self Employed and Individuals Business Need to pay up |
|
Due Date of Advance Tax Payment |
Amount Payable |
On or before 15th September |
30% |
On or before 15th December |
60% |
On or before 15th March |
100% |
Companies and individuals need to pay up
Companies and Individuals Need to pay up |
|
Due Date of Advance Tax Payment |
Amount Payable |
On or before 15th June |
15% |
On or before 15th September |
45% |
On or before 15th December |
75% |
On or before 15th March |
100% |
Late payment of advance taxes can attract fines. Missing deadlines or paying less than the mandated amount in any due period implies a levy of 1% Simple Interest (SI) on the remaining tax amount. The interest rate is applied until the remaining tax amount is wholly cleared.
Advance tax payment is made once at FY quarter ending. Deferred or less than mandated tax amount payment attracts 1 % SI on the amount for at least three months. Simple interest at the rate of 1 % on the defaulted amount is levied on the taxpayer for three months if:
If in any certain period taxpayer makes more tax payment than mandated limits then the taxpayer is refunded by the IT department. The IT department refunds the excess amount paid as well as 6% per annum interest for 10 % excess payment over mandated tax liability. The refund is made through online direct transfer in the registered account of the taxpayer.
You can make an advance tax payment with the use of tax payment challan generated at the bank branches chosen by the Income Tax Department. You can deposit this challan with the State Bank of India (SBI), Reserve Bank of India (RBI), HDFC Bank, ICICI Bank, Indian Bank, Indian Overseas Bank, and other authorised banks. There are around 926 branches in the country, which can accept advance tax payments. You could also make the advance tax payment online via the National Securities Depository site or the IT department site.
In case, you miss the deadline for the advance tax payment or the amount paid by you is less than the assigned 30 per cent of the overall liability by the 1st deadline, i.e. September 25, you’ll be liable to make payment of interest on the sum that comes to 1 per cent simple interest monthly on the amount defaulted for three months.
If you pay advance tax higher than your total tax liability, you’ll get the excess sum as a refund. The Income Tax Department will pay an interest at 6 per cent per year on the excess amount (only if your amount is more than the 10 per cent of your tax liability).
Advance tax payments are exempted for senior citizens and those using presumptive schemes
At the end of the financial year, in case the Income Tax Department finds out that you have paid more tax than you should have paid, then the IT department will refund the excess amount paid. By submitting the Form 30 the taxpayers can claim the refund. The taxpayer will have to file claim within a period of 1 year from the last assessment year.
Let’s take a look at the advance tax schedule for businessman and self-employed.
Installment Date | Amount Payable |
On or prior 15th September | Not less than 30% of the advance tax liability |
On or prior 15th December | Not less than 60% of the advance tax liability |
On or prior 15th March | 100% of tax liability |
Due Dates for the Payment of Advance Tax in the FY 2019 – 2020, AY 2020-2021
Advance Tax Due Date | Amount Payable as Advance Tax |
On or prior to 15th of June | 15% of the Advance Tax |
On or prior to 15th of September | 45% of the Advance Tax |
On or prior to 15th December | 75% of the Advance Tax |
On or prior to 15th March | 100% of the Advance Tax |
Not being able to pay advance tax can invite the imposition of penalties from the government. Those who do not pay their advance tax will have to pay an interest under sections 23 4C and 23 4B of the Income Tax Act of 1961.
Late advance tax payers can use our services to pay their penalties in an error free way and ensure that there are no more penalties they are likely to be subjected to in the near future. We have experts on our team to calculate such interest penalties very accurately, so that customers are able to dismiss their tax liabilities as early and as efficiently as possible.
The payment of advance income tax is something that can most certainly be avoided if the tax payer reports additional income to payroll department at the employer organization. In this case, the additional income will be deducted from the salary of the tax payer by the employer.
The amount that is reported as additional income has to be adjusted by the employer on the TDS that applies for such additional income. For this reason alone, it is very common practice on the part of tax payers to not report any additional income to the employer and to instead opt for the payment of Advance Tax.
The Advance Tax payment services that we provide are designed to ensure that customers have every incentive of making such payments in the first place rather than reporting additional income at the work place or paying penalties upon avoiding advance tax payments.
Efficient CA Services for the Calculation of Advance Tax
While the payment of Advance Tax may seem like a relatively easy thing to do, it is not actually so. We provide our clients with the best chartered accountant services, using which advance tax payments can be carried out in a smooth and hassle free manner at the end of the financial year or at the start of it. Our chartered accountants are highly qualified professionals who will do everything in their power to make sure that the tax calculations done are those that benefit our customers the most.
Calculations are always 100% Accurate and easily Affordable
The tax calculations that we make are always a hundred percent accurate and are designed to help salaried professionals and business men alike. Our tax calculation services are also very reasonable and can be easily afforded by and every advance tax payer.
Tax Payments made as Flexible as Possible for Customers
We try and make the tax payment structure as flexible as possible for our clients. We ensure they are always in a position to choose dates that are most convenient for them for the payment of advance tax and give them easy payment options like credit and debit card payments or cheque payment options using which tax dues are settled as quickly and as efficiently as possible.