Every Indian citizen with income coming under the income tax bracket must pay taxes. The government largely depends on tax collection to finance its operations throughout the year. It utilises the generated revenue for national development, infrastructure reform, and social improvement, eventually shaping the country’s economy. Business owners who fulfil the GST registration requirements may pay advance tax as per the applicable tax slabs. Let’s understand this type of tax, how it is calculated, how to pay it, and other important details.
What is Advance Tax?
Advance tax is the income tax amount paid in advance in instalments rather than a lump sum at the year’s end. The Income Tax Department gives due dates by which taxpayers must pay their taxes in advance. Also known as the ‘pay as you earn’ tax option, it is payable in the same year of income earned.
Who Must Pay Advance Tax?
Under Section 208 of the Income Tax Act, taxpayers whose tax liabilities exceed INR 10,000 during a financial year must pay advance tax. For instance, if the FY 2022-2023 tax liability exceeds INR 10,000, the taxpayer must pay advance tax in the same year.
Usually, advance tax is applicable for those with multiple income sources apart from salary, such as professionals, entrepreneurs, and self-employed individuals. If their income exceeds a certain limit, they must pay advance tax after completing the GST registration procedure. Multiple income sources may range from shares and FDs to rent and tenants. Senior citizens above 60 are exempt from advance tax payments.
Steps to Calculate Advance Tax
- Evaluate the income and estimate the total amount an individual earned in a year other than the salary.
- Subtract all expenses from the income, including insurance premiums, travel expenses, phone costs, etc.
- Add interest earnings from house rent, fixed deposits, gifts, investments, etc.
- If the taxable amount exceeds INR 10,000, advance tax payment is necessary.
Stepwise Procedure to Pay Advance Tax
Like other tax payments, advance tax payments require a challan. Since many banks allow advanced tax payment through Challans, the procedure has become extremely fast and convenient from the comfort of your home. Here’s a step-by-step guide for advance tax payment without hassles:
- Visit the government’s official website at http://www.tin-nsdl.com.
- Choose the correct challan from ITNS 280, 281, 282, or 284 relevant for advance tax payment.
- Enter the taxpayer’s PAN card details with other important information like phone number, address, bank name, email address, etc.
- The website’s net banking page will open after entering the details.
- Review the information regarding the payment, enter the payment details, and pay the advance tax online instantly.
Benefits of Advance Tax Payment
Advance tax payment has a list of benefits, including the following:
- Reduces the tax burden at the last moment
- Mitigates stress of making a lump sum tax payment at the fiscal year’s end
- Helps people make timely tax payments
- Raises funds for the government to work efficiently
Advance Tax Challan 280
A taxpayer must use Challan 280 to pay online taxes directly from the Income Tax Department’s website. Choosing this challan when making the payment online and submitting the form is essential to paying advance tax online. In-person tax payment is also possible, where the taxpayer must print Challan 280 and submit it to a bank authorised for tax collection.
Due Dates for Advance Tax Payments
Below is a schedule for paying advance tax payments:
| Due Date | Advance Tax Payable |
| On or before 15th June | 15% of advance tax liability |
| On or before 15th September | 45% of advance tax liability |
| On or before 15th December | 75% of advance tax liability |
| On or before 15th March | 100% of advance tax liability |
Conclusion
Advance tax, essential for individuals with varied income sources, allows for efficient calculation and payment while adhering to the GST registration requirements. This simplified online process, facilitated by Challans, eases payments, minimises stress, and aids the government in optimal fund allocation.
By proactively managing your advance tax payments and adhering to the stipulated due dates, you ensure compliance and actively contribute to the growth and development of our nation. Your timely tax contributions are integral to fueling the government’s initiatives in national development, infrastructure enhancement, and social progress while aligning with the GST registration procedure and requirements.