Advance Tax Explained: Deadlines, Calculation And Online Payment Process
Advance tax is a system where taxpayers pay a portion of their total tax liability before the end of the financial year. It applies to those whose tax dues exceed Rs 10,000 in a year.
Advance tax is the income tax paid in advance by the taxpayers on incomes from other sources, like rent, business, and capital gains, apart from the regular salary. Those who are liable to pay advance tax need to pay the total amount in a financial year in installments as per the due dates decided by the Income Tax Department.
Advance tax applies to people and businesses whose tax liability exceeds Rs 10,000 in a given year. With March 15—the final instalment deadline—just around the corner, now is the time to settle any pending payments.
Advance tax applies to income from various sources, including salaries, capital gains, rental earnings, and business revenue. Even Non-Resident Indians (NRIs) with taxable income above Rs 10,000 in India need to comply with this rule.
Advance tax payment schedule
Advance tax must be paid following the due dates set by the Income Tax Department:
On or before June 15—15% of advance tax payable
On or before September 15—45% of advance tax payable
On or before December 15—75% of advance tax payable
On or before March 15—100% of advance tax payable
How to calculate advance tax
To determine your advance tax liability, follow these steps:
Compute gross total income by adding income from salary, house property, business/profession, capital gains, and other sources.
Subtract applicable Chapter VIA deductions from gross total income.
Deduct the rebate under Section 87A, if applicable.
Add the surcharge amount (if applicable).
Add health and education cess on the total tax amount (including surcharge).
Subtract marginal relief (if applicable).
Arrive at net total income.
Calculate tax liability based on the applicable tax slabs.
Deduct TDS (tax deducted at source) to determine the total income tax liability.
This tax liability is then divided into installments, payable as advance tax, based on the prescribed percentages set by the Income Tax Department.
How to pay advance tax online
The Indian government offers an easy online process to pay advance tax via the Income Tax Department’s e-filing portal:
Visit the official e-filing portal of the Income Tax Department.
Click on 'e-pay Tax' under ‘Quick Links’.
Enter your PAN and mobile number, then click ‘Continue.’.
Input the OTP received on your mobile and proceed.
Select the ‘Income Tax’ tab and click ‘Continue.’.
Choose the appropriate assessment year and select ‘Advance Tax (100)’ as the type of payment.
Enter the tax amount as per your calculations.
Select your preferred mode of payment (debit card, net banking, UPI, etc.) and click ‘Continue.’
Preview the payment details and confirm by clicking ‘Pay Now.’
After payment, an acknowledgement receipt will appear with the BSR code and challan serial number. Keep this receipt for filing your tax return.
