What is advance tax?
As the name suggests, advance tax is the practice of paying taxes in advance rather than paying a lump sum amount at the end of the financial year. Also known as ‘pay as you earn’ scheme, these taxes are supposed to be paid in the same year the income is received.
Who needs to pay advance tax?
Advance tax is for those who earn money from sources other than salary. It is applicable for self-employed individuals, professionals, and business men if their income exceeds a certain limit This includes money that comes from shares, interest earned on fixed deposits, rent or income received from house tenants. Senior citizens who are more than 60 years of age are exempt to advance tax.
How to Pay Advance Tax?
Just like regular tax payment, advance tax payment is also done using challan. There are many banks that allows you to pay advance tax through challans. You can also pay advance tax online from the comfort of your home. Here’s a step-by-step guide that will help you pay advance tax online without any hassles –
1. To pay advance tax online, you need to click on the government’s official website – http://www.tin-nsdl.com
2. Choose the correct challan that is ITNS 280, ITNS 281, ITNS 282 or ITNS 284 as relevant to pay your advance tax.
3. Fill in your PAN card details along with other important information such as your address, phone number, e-mail address, bank name, etc.
4. Once you have entered all the details, you will be redirected to the net-banking page of the website.
5. Now, you will receive all the information regarding your payment. Enter all payment details and pay your advance tax online successfully.
What are Due Dates for Payment of Advance Tax?
Here’s a schedule of advance tax payment for individual and corporate taxpayers –
| Due Dates | Advance Tax Payable |
| On or before the 15th of June | 15% of advance tax liability |
| On or before the 15th of September | 45% of advance tax liability |
| On or before the 15th of December | 75% of advance tax liability |
| On or before the 15th of March | 100% of advance tax liability |
Conclusion
Advance tax is a valuable tool for individuals and businesses to manage their tax liabilities proactively. By spreading tax payments throughout the year, it not only eases financial burdens but also ensures compliance with tax regulations, reducing the risk of penalties and legal issues. Whether you’re an individual with multiple income sources or a business owner, understanding and effectively managing advance tax can lead to better financial planning and peace of mind. Remember, it’s always a good idea to consult with a tax professional to ensure you’re meeting your tax obligations correctly and efficiently.
This Article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update etc. if any.
Published on: September 13, 2023