Advance Tax

Let’s be very frank, paying taxes is not fun for anyone. Thus, it will be a huge relief if you are done and dusted with taxes as soon as possible. The calculation of the income tax, as well as, e-filing income tax can sometimes turn out to be a very tedious and lengthy process. Advance Tax is basically the income tax you have to pay in advance instead of making a one-time lump sum payment at the end of the financial year. It is also called “pay as you earn” tax. An advance tax has to be paid in instalments as the dates are given by the income tax department. Let’s take a look at how you can make the advance tax payment and the advance tax payment dates.

An individual is liable to pay the advance tax if their tax liability exceeds ₹ 10,000 in the fiscal year. Advance tax is liable to be paid when the income comes from sources other than the salary of an individual. Example of secondary sources of income could be through the interest on investments, capital gains, business, house property, lottery, rent etc. Advance Tax Challan has to be filled and the due payment has to be made on the due dates specified by the government.

Any refunds due fetch an interest of 0.5% per month or 6% on an annual basis in the event of the income tax rebate. However, in addition to this, for non-repayment of the advance tax, you will be charged at 12% interest per year or 1% for each month of the non-payment of taxes. thus, you should not delay the tax payment in order to avoid the advance tax interest. Advance Tax liability has to be cleared before the end of the fiscal year. The advance tax payment online is the best way to clear this liability.

The interest is 1% and comes under a simple interest category as specified via section 234C and 234B of the income tax act.

Who has to pay Advance Tax?

Now we have looked at the advance tax meaning, let’s look at who is eligible to pay this tax.

Tax Liability

Advance Tax is a fairly common tax paid by many people every financial year. However, not everyone has to pay this tax.  Advance tax payment has to be done only by individuals whose tax liability exceeds ₹ 10,00 in one fiscal year.

Businesses as well as Professionals

The advance tax payment procedure is one that applies to all professions of every budget. Businessmen, freelancers, as well as salaried professionals al should pay the advance tax if they are eligible. Advance tax payment by companies is a good way for them to avoid high penalties when the Fiscal year ends.

Presumptive Schemes

There are certain conditions wherein the concerned individual does not have to pay the advance tax liable on them. here are the conditions of the presumptive scheme of the advance tax:

  • Individuals over the age of 60 (Senior Citizens) who do not own a business establishment of any kind are exempt from paying the advance tax.
  • Taxpayers whose business income is below 8% of the business turnover can also choose not to pay the advance tax.
  • A business person(Professionals such as Architects, Lawyers, as well as, doctors) with an annual turnover of more than 2 crores can also apply for the presumptive scheme of advance tax payment under the sections 44AE and 44AD of the income tax act.
  • Scheme applicable only if the annual receipts are less than ₹ 50 lakhs.

Presumptive schemes basically mean that instead of paying instalments of the income tax the taxpayers can choose to pay the income tax in one go at the end of the fiscal year.

Advance Tax Payment Due Dates

For the Fiscal Year 2018-19, Following are the due dates for the payment of advance tax:

Advance Tax  AY 2019-20

Due Date Advance Tax Payable
On or Before 15th June 15% Advance Tax
Before 15th September 45% Advance Tax
Before 15th December 75% Advance Tax
Before 15th March 100% Advance Tax

 How much Advance Tax to pay by March 2019?

By March 2019, the taxpayer has to pay 100% of the Income-tax as the advance tax by 15 March 2019.  Let’s assume you are in the 30% tax bracket. The income tax is deducted by the employer at source also known as TDS. Learn more about TDS. Let’s assume you have an extra income of ₹ 1,00,000 via interest on a Fixed Deposit. The bank will deduct tax at a rate of 10%. The additional income tax will come out to be ₹20,900. By March 2019, as a taxpayer, you have to pay the entire 100% amount.

Advance Tax Payment Procedure

The procedure for payment of the advance tax is very simple. Let’s look at the steps for advance tax payment online:

Step 1: Check that your bank with online banking facility has the provision for the payment of income tax.  If not, then you cannot make the payment of the income tax online. Here’s a list of banks accepting the online payment of income tax.

Allahabad Bank Andhra Bank Axis Bank
Bank of Baroda Bank of India Bank of Maharashtra
Canara Bank Central Bank of India Corporation Bank
Dena Bank HDFC Bank ICICI Bank
IDBI Bank Indian Bank Indian Overseas Bank
Jammu and Kashmir Bank Oriental Bank of Commerce Punjab National Bank
State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of India
State Bank of Indore State Bank of Mysore State Bank of Patiala
State Bank of Travancore Syndicate Bank UCO Bank

Step 2: If your bank is listed within the above-listed banks for payment of income tax, head on over to the website of TIN (http://www.tin-nsdl.com/) and login with your account credentials . If you do not have an account on the website create an account by furnishing your relevant details.

Step 3: Head on over to the services section and click “e-payment”

Step 4: Select on Challan No./ITNS 280/ 281

Step 5: Select the type of tax applicable

0020: Income Tax on Companies

0021: Income Tax (Other than companies)

Step 6: Click on the Assesment Year 2019-20

Step 7: Select the appropriate type of tax applicable i.e. 100 (Advance tax).

Step 8: Enter your PAN Card details. Apply for PAN Card or  Check PAN Card Status Online

Step 9:  Check that details and the tax liability have correct details and are against your name.

Step 10: You will be redirected to the bank’s online facility once you click PROCEED. Make payment and take note of the Transaction ID and keep the challan receipt handy.  It can be helpful to claim the Income Tax Return

Advance Tax Payment Challan

In addition to this, if you cannot avail making advance tax payment online, you should go ahead and fill up the advance tax payment challan and submit it with the respective bank with the amount to be paid. Here, we enclose the challan for your reference.

Advance Tax Calculation

The advance tax should be paid by the concerned taxpayer on or before the due dates in order to avoid auditing by the Income Tax Assessing Officer. If taxpayers fail to comply with the due dates for the payment of the advance tax, they will be served notice from the Income Tax Department.

Self Assesment

Before paying the advance tax, the taxpayer has to make an estimate of how much advance tax liability they have. From the tax liability, the TDS will be deducted and the advance tax liability will be calculated from the remaining amount. Tax reliefs according to sections 90 or section 90A will be deducted, as well as, the tax credit allowed to be set off according to sections 115JAA or section 115JD will also be deducted from the advance tax liability.

Advance Tax Calculator

The government has provided a dedicated Advance Tax calculator:

Advance Tax Payment

Advance Tax Payment

Advance Tax Calculator

 

Assesment by Income Tax Officer

In case, the taxpayer has failed to pay the advance tax or has paid an amount lower than the advance tax due for his income, the Income Tax Officer can issue an order for the taxpayer to pay his due advance tax. This order is passed under the regulations of section 210(3) of the income tax act. All the orders for remitting the advance tax payment have to be given before the end of February.

If in case the advance tax payment specified by the income tax assessing officer is greater than the estimated advance tax according to the income, taxpayers can submit his own estimate of current income. The intimation has to be sent via the Form 28A. Below attached is a copy of the form for reference

The advance tax thus becomes one the most important Income Tax Filing procedures in order to avoid accumulation of interest in the income tax payable.

LegalRaasta is one of the top Legal Services Provider across India, We specialize in simplyfying legal compliances for businesses. Some of our top services include, Trademark filing, Food License Registration, as well as, GST enrolment. In addition to this, you can avail taxation services like Business Return, Bulk Return.Get in touch with us with your requirements at +91-875-000-8585