Call Us

FOR EXISTING POLICY

Have query on premium, payout or any servicing need?

Call us:

1 860 266 9966

Monday - Saturday | 10 am - 7 pm IST

Call charges apply

Dedicated NRI Helpdesk:

+91 22 6251 9966

Monday - Saturday | 10 am - 7 pm IST

Call charges apply

FOR NEW POLICY

Want to buy a new policy online?

Call us:

+91 22 6984 9300

Give missed call for a call back:

+91 11 6615 8748

Monday - Sunday | 8 am - 11 pm IST


Exclusively for NRIs:

Call us:

Give missed call for a call back:

+91 11 4473 0242

Monday – Sunday | 9 am – 9 pm IST

Language

What is Advance Tax? 


The amount of income tax~ that you pay in advance instead of making a lump-sum payment at the end of the year is known as advance tax. One of the main distinctions between income tax and advance tax is that there are due dates decided by the income tax department for the payment of advance tax in the form of instalments, which is not the case with income tax payments.

Advance tax is also known as pay-as-you-earn tax and is calculated on the income one earns during a given year. Advance tax collection helps the government collect taxes from individuals whose TDS (Tax Deducted at Source) is lesser than their total tax liability or those who do not come under any tax bracket. And since the tax will have to be deposited in such a scenario, advance tax payment streamlines the tax collection process.

While advance tax payment can be made through the offline mode, an online procedure for quick and hassle-free tax payment is also available for taxpayers.

Looking to buy a new insurance plan? 

Our experts are happy to help you!

+91

Select plan
  • Term plans
  • Saving plans
  • Retirement plans
  • Wealth plans
  • I don't know/I need help

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in

Advance tax, also known as the pay as you earn tax, is to be paid by individuals who earn through sources of income other than their salary, such as investments, lotteries, rent, etc. To pay advance tax, the taxpayer needs to estimate their income and then compute the estimated tax on the same to understand how much tax they need to pay. These are the reasons why advance tax is important:

  • The process of income tax collection can be quite cumbersome and detailed. By ensuring that advance tax is collected in instalments throughout the year, the entire process can be better managed, and tax collection becomes easier for the authorities.
  • Since advance tax payment is a basic requirement under the law, the taxpayer should be able to compute and estimate whether they need to pay advance tax or not. This is, however, the responsibility of the taxpayer since the authorities cannot make an estimation of the income earned by the individual.

In these few steps, you can find out whether you need to pay advance tax and how much advance tax you need to pay:

  • Calculate the income you have earned during the fiscal year for which the advance tax has to be calculated. Here are the following heads of income that should be considered for the income earned:

    • Income from interest on FDs, savings accounts, etc.
    • Professional income
    • Rental income
    • A minor’s income if it is added to the taxpayer’s income
    • Capital gains
    • Any other income
  • Include your salary to the income above and know the gross taxable income (here, advance tax is not applicable, but the sum total could change your tax slab and the tax liability)
  • Calculate the payable tax by using the latest income tax slab as relevant to you.
  • Deduct the Tax Deduction at Source (TDS) as per the TDS slab that is applicable.

If your tax liability after TDS is above ₹10,000, you will have to pay advance tax.

 

Tata AIA Life Insurance Plans to Secure your Family 

Example of Advance Tax Calculation

Here is an example that better explains advance tax calculation:

Ramona, a businessperson, estimates her annual gross income for FY 2019-20 at ₹20,00,000. Her expenses are estimated to be ₹12,00,000. She has also ₹40,000 in her PPF account and pays a ₹25,000 premium towards her life insurance policy.

Moreover, Ramona is also paying a health insurance premium of ₹12,000. All of these professional receipts are subject to Tax Deduction at Source (TDS), and as per her self-assessment, there is a TDS of ₹30,000 on some of the professional receipts for FY 2019-20. Besides that, she also estimates an interest of ₹10,000 on her fixed deposit savings. Given below is Ramona’s advance tax liability:

Advance Tax Estimated Income

Amount in Rupees

Amount in Rupees

Income from the profession:

 

 

Gross receipts

₹20,00,000

 

Less: Expenses

₹12,00,000

₹8,00,000

Income from other sources:

 

 

Interest from fixed deposit

 

₹10,000

GROSS TOTAL INCOME

 

₹8,10,000

Less: Deduction under section 80C

 

 

Contribution to PPF

₹40,000

 

LIC premium

₹25,000

 

 

₹65,000

 

Deduction under section 80D

₹12,000

₹77,000

TOTAL INCOME

 

₹7,33,000

 

 

 

Tax Payable

 

₹59,100

Add: Education cess @ 4%

 

₹2,364

 

 

₹61,464

Less: TDS

 

₹30,000

Tax Payable In Advance

 

₹31,464

Who Should Pay Advance Income Tax?

You should be paying advance income tax if you:

  • Are a self-employed individual
  • Are a lottery winner
  • Earn rent from house property
  • Earn interest on fixed deposits
  • Earn income from capital gains on shares

 

Salaried, freelancers and businesses:

As a salaried employee, a freelancer or a businessperson, your total tax liability should be at least ₹10,000 or above for a financial year if you are liable to pay advance tax.

Presumptive income for Businesses:

If you select the presumptive taxation scheme under section 44AD, you will have to pay the entire advance tax amount in a single instalment on or before 15th March. Alternatively, you can pay all of your taxes by 31st March.

Presumptive income for Professionals:

If you are an independent professional such as an architect, doctor, lawyer, and so on, and have opted for the presumptive scheme under section 44ADA, you can pay the entire advance tax amount in a single instalment on or before 15th March or all of your tax dues by 31st March.

Exemption to Senior Citizens from Advance Tax Income Payment

As per Section 207 of the Income Tax Act, a resident senior citizen above the age of 60 years or more need not pay advance tax if they do not have any income from their profession or business. Furthermore, they will also have to fulfil the following conditions to be exempt from advance tax payment:

  • They should be an individual taxpayer
  • They should be a resident of India as per the Income Tax Act
  • They should be of 60 years or above during the year
  • They should not have any taxable income under the section “Profits and gains of business or profession”

How to Pay Advance Tax Online?

To pay advance tax online, you will have to make the payment through Challan 280, also known as ITNS 280, which has to be submitted on the official website of the Tax Information Network of the Income Tax Department (TIN NSDL).

Tax payment in itself can be a lengthy process that involves quite a bit of paperwork and may take up some time. To ease the process of advance tax payment, the e-tax system by the Income Tax Department enables taxpayers to pay their taxes online faster and in a more convenient manner.

 

Here is how you can make an advance tax payment online:

  1. Visit http://www.tin-nsdl.com and go to “e-payment” under Services to Pay Taxes Online. Alternatively, you can also click on the "e-pay taxes" tab.
  2. Select the appropriate challan from the list given. For instance, select ITNS 280 for the payment of advance tax.
  3. Enter PAN or TAN details and other information as needed, e.g., the taxpayer’s address, bank details, etc.
  4. Once the data is submitted, you will be able to see a confirmation. The PAN/TAN validity as per the ITD PAN/TAN master will show the taxpayer's full name on the confirmation screen.
  5. Once the confirmation of the data is complete, the taxpayer will be redirected to the net-banking website of your bank from which the payment is to be made.
  6. Next, log in to your online banking website to fill in the payment details and proceed with the advance tax payment.
  7. After this step, you will see a challan counterfoil with the CIN, payment details and your bank name, which is proof of the advance tax payment.

What are the Advance Tax Payment Due Dates?

Advance Tax Payment for self-employed individuals and business owners

Due Date of Advance Tax Instalment

Tax Payable

By 15th September

At least 30% of the advance tax amount

By 15th December

At least 60% of the advance tax amount

By 15th March

100% of the advance tax amount

 

Advance Tax Payment for Companies

Advance Tax Instalment

Due Date

Advance Tax to be Paid

1st instalment

By 15th June

15% of the advance tax

2nd instalment

By 15th September

45% of the advance tax

3rd instalment

By 15th December

75% of the advance tax

4th instalment

By 15th March

100% of the advance tax

Which Details are Required in Advance Tax Payment?

Challan No. ITNS 280 should be duly filled on the prescribed due dates when the advance tax payment will be made. The details needed are:

PAN Details: Mention the correct PAN information to avoid depositing the tax in someone else’s name.

Assessment Year: Choose the assessment year correctly for the advance tax payment since it is to be updated for the next financial year.

Choose the type of payment: Select the payment type carefully. For instance, for advance tax, the tax will be paid for the same financial year as per the estimated income, and if it is paid after the end of the financial year, it is known as self-assessment tax.

Once the payment has been made, the Challan Identification Number (CIN), which is proof of the payment, will be provided so that you can use it while filing your income tax returns. And just to be cautious, check again if the Income Tax Department has received the payment through ITNS 280.

How to Check Advance Income Tax Payment Status?

This is how you can check your advance income tax payment status through Form 26AS:

  1. Log on to the ‘e-Filing’ Portal https://www.incometax.gov.in/iec/foportal/
  2. Go to 'My Account', and click on 'View Form 26AS (Tax Credit)'.
  3. Go through the disclaimer, click 'Confirm' and you will be directed to the TDS-CPC Portal.
  4. Once there, go ahead with the acceptance of usage and click on 'Proceed'.
  5. Next, click on ‘View Tax Credit (Form 26AS), ’Select the ‘Assessment Year’ and ‘View Type’ (type of file – HTML/PDF/Text) and then ‘View / Download’.

You can also visit the TIN NSDL website to check your advance income tax payment status:

  1. Go to the official website: https://tin.tin.nsdl.com/oltas/index.html
  2. Select one – the TAN (Tax Deduction Account Number)-based view or the CIN (Challan Identification Number)-based view.
  3. Fill in all the necessary details correctly to check the status.
  4. As a tax deductor, one can download the Challan Details file for a specific period through the TAN-based view to verify the Challan entries made in the e-TDS/TCS statement.
  5. If you want to check the status at the collecting bank branch, here is how you can do it:

The tax collecting branch can view the total amount and the total number of challans for each major head code after you provide the branch scroll date and the major head code. They can also check the following information:

  • Challan Tender Date
  • Name of Taxpayer
  • Challan Serial Number
  • PAN/TAN
  • Date of receipt by TIN
  • Amount

At the nodal bank branch, the nodal branch can view these details:

  • Nodal Branch Scroll Number
  • Number of Challans
  • Major Head Code – Description
  • Scroll Date
  • Number of Branches
  • Total Amount

Moreover, for every Nodal Branch Scroll Number, the following details can be viewed:

  • BSR Code
  • Date of receipt by TIN
  • Total Amount
  • Branch Scroll Number
  • Number of Challans
  • Branch Scroll Date
Advance Tax Challan 280

It is possible to pay your advance tax online on the official income tax website with the help of Challan 280. The simple process does not require the assistance of a Chartered Accountant or any other official. Since you will need to pay the advance tax, this online facility ensures that you do not have to pay any additional taxes. All you need to do is fill out the online form correctly and then use it online to make the tax payment or get a printout to pay the advance tax offline at the bank.

Advance Income Tax Late Payment and Interest

If the advance tax payment is delayed, then you will have to pay the penalty as per Section 234B of the Income Tax Act. The interest will be charged at 1% per month on the pending amount if 90% of the advance tax payment is not complete by the end of the financial year.

Under Section 234B of the Income Tax Act, an interest at the rate of 1% will be levied per month on the pending amount if the tax is not paid as per the instalment schedule for deferment in instalments of advance tax.

What are the Benefits of Paying Advance Tax?

These are the following benefits of paying your advance tax in a timely manner:

  • Paying advance tax means that your tax payments are made in hassle-free instalments. This eliminates a majority of the stress associated with calculating your tax liability and making tax payments.
  • Since advance tax is to be paid in 4 instalments as per a predefined and standard schedule, there is no need for last-minute tax calculations and payments, which can lead to miscalculations.
  • When you pay advance tax, it enables the government to earn interest on the amount collected under the advanced tax. This helps increase government funds which enable better administration.
  • Advance tax payments are to be made as per the advance tax schedule by the given dates, which helps reduce the burden of tax payments on the taxpayer. This also ensures that businesses and the income earned from them do not suffer a loss. 


 

Tata AIA Life Insurance Plans to Secure your Family 



Refund in Advance Tax Payment

When paying advance tax, the amount of tax and the timelines for the tax payment are clearly outlined. While there is a penalty on the non-payment or delay of advance tax, there is also a provision for recovering any extra payments that you may have made towards your advance tax.

At the end of the financial year, the Income Tax Department calculates the total amount of advance tax paid by the taxpayer, and in case there is an excess amount that has been paid, the same can be refunded. For this, the taxpayer will have to fill out Form 30 and make a claim for this additional amount within a year from the assessment year’s previous year.

Looking to buy a new insurance plan? 

Our experts are happy to help you!

+91

Select plan
  • Term plans
  • Saving plans
  • Retirement plans
  • Wealth plans
  • I don't know/I need help

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in

Frequently Asked Questions (FAQs) About Advance Tax

When should I pay my advance tax?

Since advance tax payment is made in instalments throughout the financial year, it is necessary to pay 15% of the tax by 15th June, 45% of the advance tax by 15th September, while 75% of the tax should be paid by 15th December and 100% of the advance tax payment should be made by 15th March.

If you opt for the presumptive taxation scheme, be sure to pay 100% of advance tax on or before 15th March during the financial year.

Is an NRI required to pay advance tax?

Yes, an NRI will have to pay advance tax if their tax liability is above Exemption to Senior Citizens from Advance Tax Income Payment 10,000 during the financial year. If advance tax is not paid then under Section 234B (delay in advance tax payment) and Section 234C (deferred instalments in advance tax payment), applicable interest may be charged.

I'm an elderly person with pension and interest income. Should I pay tax in advance?

Since senior citizens do not have a business income, they do not need to pay advance tax during the financial year. However, there is a self-assessment tax that needs to be paid after the final tax liability has been calculated for the financial year.

Can I use an 80C deduction while calculating my income to calculate my advance tax?

Yes, you can consider the deductions under Section 80C of the Income Tax Act while calculating your advance tax payment, like in the case of income tax payments.

What will happen if I don't pay the fourth instalment of my advance tax by the due date, which is March 15th?

The advance tax payment as per the schedule is 15th June, 15th September, 15th December and 15th March. However, if you are unable to pay the last instalment of your advance tax by the due date, you will be charged simple interest at the rate of 1% on the taxes due under Section 234B of the Income Tax Act.

Under this Section, you should have paid 90% of the tax payable by the end of the fiscal year. Since the third instalment to be paid on 15th December is 75% of the advance tax, be sure not to skip your 4th instalment on 15th March.

What occurs if I pay more or less advance tax than is required for a financial year?

Under Section 234B of the Income Tax Act, the payment of less than 90% of the advance assessed tax before the due date will attract an interest penalty of 1% per month. If the advance tax paid exceeds your total tax liability, you will receive a refund on the additional sum, and the Income Tax Department pays 6% every year on the additional amount if it is over 10 percent of your tax liability.

Can I make a Section 80C deduction when estimating my income to determine my advance tax?

Yes, you can claim a tax deduction under Section 80C of the Income Tax Act only after you pay the self-assessment tax and not before you do so.

Will any tax payable till 31 March be treated as advance tax?

Yes, any tax paid until 31st March will be considered as advance tax. In case the bank is closed on the day that you want to make your advance tax payment, you can make the tax payment soon on the next working day.

How can I write a check for a tax advance?

You can write a check for the advance tax payment by downloading the challan at- https://www.incometaxindia.gov.in/Forms/107010000000345598.pdf. Once you fill in the details, keep the following things in mind:

  • Use a separate challan for each type of payment.
  • Compulsorily mention all the PAN details correctly.
  • Issue the cheque/DDs towards payment of income tax as “Pay --- (Bank name where the Challan will be deposited) A/c Income Tax.
  • Check that the bank’s acknowledgement has the BSR code of the bank branch, the date of deposit of challan, and the challan serial number. These will be needed for filing your Income Tax Return.

How do I download a receipt for an advance income tax payment?

You can download the advance income tax payment receipt by visiting https://tin.tin.nsdl.com/oltas/index.html, selecting the CIN (Challan Identification Number) Based View and downloading or taking a screenshot of the CIN after clicking on view.

Is a taxpayer who chooses Presumptive Taxation under Sections 44AD or 44ADA required to pay advance tax?

Yes, if a taxpayer chooses presumptive taxation as a business or as a professional under Sections 44AD or 44ADA, they will pay advance tax. They have to pay the whole advance tax amount in a single instalment on or before 15th March or all their tax dues by 31st March.

When must the Assessing Officer calculate the Advance Tax Liability?

The Assessing Officer should calculate the advance tax liability through a written order or amended order anytime during the financial year but not after the last day of February.

Which tax rates are to be applied when determining the amount of advance tax due?

Under Section 234B of the Income Tax Act, simple interest at the rate of 1% per month will be charged if you pay less than 90% of the advance assessed tax. The interest rate will be calculated for each defaulted month’s amount until the advance tax payment is complete. And under Section 234C of the Income Tax Act, an interest penalty of 1% is charged if the advance tax instalments are not paid on time by their respective deadlines.

What tax amount must be paid in each advance tax instalment?

Here is the table that shows the schedule of the advance tax payment:

Advance Tax Instalment

Due Date

Advance Tax to be Paid

1st instalment

By 15th June

15% of the advance tax (excluding the amount paid)

2nd instalment

By 15th September

45% of the advance tax (excluding the amount paid)

3rd instalment

By 15th December

75% of the advance tax (excluding the amount paid)

4th instalment

By 15th March

100% of the advance tax (excluding the amount paid)


People like you also read

Disclaimer

  • Source: https://incometaxindia.gov.in/
  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not a guaranteed issuance plan and it will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.
  • Please know the associated risks and the applicable charges, from your insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this document is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • ~Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you. 
  • L&C/Advt/2022/Sep/2111