Advance Tax Payment

ADVANCE TAX PAYMENT : ELIGIBILITY, CALCULATIONS &
EXEMPTION
 WHAT IS ADVANCE TAX PAYMENT?
Advance tax is a method of collection of tax by Central Government in the form of pre-paid
taxes. Such advance tax is in addition to TDS. Advance tax is tax payable by individuals who
have sources of income other than their salary. This is applicable to rent, capital gains from
shares, fixed deposits, lottery winnings, etc. It can be paid online or through certain banks.
Advance tax is also known as ‘Pay as you earn’ scheme. The tax is payable if your tax liability
exceeds Rs.10,000 in a financial year. The tax should be paid in the same year in which the
income was received, i.e., previous year itself.
Advance tax can be paid through tax payment challans at bank branches which are authorised by
the Income tax department. It can be deposited in authorised banks such as ICICI Bank, Reserve
bank of India, HDFC Bank, Syndicate Bank, Allahabad Bank, State Bank of India and more.
Another way of advance tax payment is by paying it through Online tax payment website of the
Income Tax department or the National Securities Depository.
 WHO IS LIABLE TO PAY ADVANCE TAX (Sec 207)?

The eligibility criteria you will have to fulfil in order to pay advance tax are:
 Your tax liability should be Rs.10,000 and above.
 You should be a salaried or a self-employed individual.
 Income received via capital gains on shares.
 Interest earned on fixed deposits.
 Winnings earned from a lottery.
 Rent or income earned from house property .
Installment of Advance Tax Payment Due Date for FY 2020-21
The last date to pay final installment of advance tax payment for Financial year 2020-21 is March
15th, 2021. On this date 100% of advance tax liability has to be paid by taxpayers.
Listed below is the advance tax schedule for self employed and businessmen-
Installment Date Amount Payable
On or before September 15th Not less than 30% of the advance tax liability
On or before December 15th Not less than 60% of the advance tax liability
On or before March 15th 100% of tax liability
Payment Due Date Amount to be Paid as Advance Tax

On or before 15 June 15% of the Advance Tax
On or before 15 September 45% of the Advance Tax
On or before 15 December 75% of the Advance Tax
On or before 15 March 100% of the Advance Tax

Advance Tax for Assessees (apart from the ones who are covered under section 44AD)
 HOW TO PAY ADVANCE TAX ONLINE?

The advance tax can be paid online through the online facility offered by the Income Tax
department. Listed below are the steps that need to be followed to make a successful online
payment for advance tax.
 Go to the official Government www.tin-nsdl.com.
 Click "Services" - epayement: Pay Taxes Online
 Select the right challan to pay your income tax ( Advance tax)
 Fill in the correct details in the form. You’ll have to fill in details such as the right assessment
year, address, phone number, email address, bank name, captcha code and other such
important details.
 Once you are done filling in the details, you’ll be redirected to the bank’s Net Banking page.
The income to be paid should be rechecked in this page.
 Next, you’ll get details of your payment including your challan number.
It is important to report your payment after you’ve made the payment. You can do so by adding
an additional entry under the paid tax page.
 ADVANCE TAX CHALLAN 280

Challan 280 allows people to pay their income tax online on the website of the Income Tax
Department of India. On the website, people have to select this challan and fill the form and then
use it to pay taxes online/office. If they want to pay the tax offline, they have to download
Challan 280 form from the Income tax welcome, fill it and submit it at the bank.
 HOW TO CALCULATE ADVANCE TAX PAYMENT (Sec 209)?
You can easily calculate how much advance tax you will have to pay by following the steps and
pointers given below:
 Step 1: Estimate how much income you earned in the financial year for which you are doing
the advance tax calculation. These are the heads of income that should be taken into account
for the income earned:
 Income from any interest earned from FDs, savings account, etc.
 Capital gains
 Professional income
 Rental income
 Income of minors if it is added to that of the taxpayer
 Any other income
 Step 2: Add your salary to the figure above to arrive at the gross taxable income (while
advance tax is not applicable on your salary, the sum total may change your tax slab which will
change the tax liability further)
 Step 3: Calculate the tax payable by applying the latest income tax slab that is applicable to
you
 Step 4: As per the TDS slab, deduct the TDS that is likely to get deducted or which has already
been deducted
If your tax liability after deduction of TDS exceeds Rs.10,000, you are liable to pay advance tax.
 EXAMPLE OF ADVANCE TAX CALCULATION:
Assuming if your tax liability is Rs.1 lakh, then you will pay:
Payment Due Date Amount to be Paid as Advance Tax
On or before 15 June Rs.15,000
On or before 15 September Rs.45,000
On or before 15 December Rs.15,000
On or before 15 March Rs.25,000
Make sure you pay your tax on time to avoid any penalties.
Note: The advance tax will vary depending on the tax amount and the date on which you clear
your tax.
 ADVANCE TAX LATE PAYMENT AND INTEREST:
If advance tax paid by you is less than 90% of the assessed tax, then you will be charged an
interest of 1% every month under Section 234B of the Income Tax Act. The interest is computed
as 1% interest on the defaulted amount for every month until the tax is paid off completely. The
same interest penalty will be applicable if you don’t pay by the second or third deadline.
Under Section 234C of the Income Tax Act, if you do not pay your advance tax installment on
time, then you will be charged an interest rate of 1%.
 EXEMPTION IN ADVANCE TAX PAYMENTS:
 Senior citizens aged 60 years and above are exempted from paying the advance tax.
 Salaried individuals falling under TDS net are exempted from paying the advance tax.
However, any earnings from sources such as interest, capital gains, rent and other non-salary
income will attract advance tax.
If TDS deducted is more than the tax payable for the year, then one does not have to pay the
advance tax
 BENEFITS OF PAYING ADVANCE TAX:
 Advance tax helps in reducing stress of taxpayers. By paying tax in advance, taxpayers do not
have to worry about money shortage or tax payments at the last moment.
 It speeds up the tax collection process.
 It increases government funds as the government can earn an interest on the collected amount.
 Advance tax payment saves people from defaulting on their tax payments.
 It helps businesses in managing their finances well and provides an idea of the income they
have earned during the year.
 REFUND IN ADVANCE TAX PAYMENT:
At the end of the year, if the Income Tax Department finds out that you have paid more tax than
you should have paid, then it will refund the excess amount. Taxpayers can claim refund by
filling and submitting Form 30. They have to make the claim within a period of one year from
the last year of the assessment year.

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ADVANCE TAX PAYMENT : ELIGIBILITY, CALCULATIONS &

 WHO IS LIABLE TO PAY ADVANCE TAX (Sec 207)?

Installment Date Amount Payable

On or before March 15th 100% of tax liability

Payment Due Date Amount to be Paid as Advance Tax

On or before 15 September 45% of the Advance Tax

On or before 15 December 75% of the Advance Tax

On or before 15 March 100% of the Advance Tax

 HOW TO PAY ADVANCE TAX ONLINE?

 ADVANCE TAX CHALLAN 280

Payment Due Date Amount to be Paid as Advance Tax

On or before 15 June Rs.15,000

On or before 15 September Rs.45,000

On or before 15 December Rs.15,000

On or before 15 March Rs.25,000

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