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Advance Tax Payment- Procedure and Provision

Advance Tax- Apart from the Tax Deducted at Source (TDS) the government collects tax in advance on a quarterly basis, which is called an Advance Tax. This also reduces the burden of taxpayers by dividing the tax liabilities into parts and result in smaller cash outflow. In this article, we will read about the provision of Advance Tax Payment.

What is Advance Tax

Advance Tax means Income Tax, which needs to be paid by the assessee in advance before year-end. These payments have to be made in installments on or before the due dates as provided by the department.

Who has to make Advance Tax Payment for FY 2020-21

For every financial year, the assessee needs to pay tax in advance if his tax liability is expected to be Rs. 10,000 or more. Advance Tax applies to all taxpayers including salaried, freelancers, professional, and senior citizens. However senior citizens having the age of 60 years or more than 60 years and not running any business is not required to pay advance tax.

What is the due date for payment of Advance Tax

Advance Tax needs to be paid by the assessee in 4 installments but for presumptive taxation, it can be paid 100% in the last installment. 

How to calculate advance tax

To calculate advance tax liability for FY 2020-21 you need to follow the below steps-

ParticularsAmount
First, calculate income under the 5 headsxxxx
Less- Broughts forward losses and allowancexxxx
Gross Total Incomexxxxx
Less- Chapter VI Deductionsxxxx
Estimated Total Incomexxxxx
Calculate Income Tax on Estimated Income (As per the Tax Slab)xxxx
Add- Surchargexxxx
Total Tax Payablexxxxx
Add- Education Cess and H. Education Cessxxxx
Total Tax Liabilityxxxxx
Less:- Any Reliefxxxx
Less:- TDS deductedxxxx
Advance Tax Liabilityxxxxx

Advance Tax Payment Online

To pay advance tax online you can follow the below procedure-

- Visit Income Tax e-payment website from here

- Select challan No. ITNS-280 under Non-TDS/TCS block

- Fill in the required details and select advance tax option

- Choose preferred payment option and pay the tax.

- After successful payment, a challan certificate will be displayed which contains the relevant information.

- This certificate is proof of Advance Tax Payment.

Advance Tax Payment offline

If you want to make advance tax payment offline, the procedure of the same is here-

- First of all download the challan 280 Frome Here

- Now fill the required details

- After that, you have to visit the designated bank with filled challan and cash/cheque.

- Bank will provide you the payment slip which is the proof for payment of advance tax.


Penal Interest for Advance Tax

If the assessee is required to pay Advance Tax but the same is not paid in time or paid in time but the amount paid is less than the required liability, then the taxpayer is required to pay interest u/s 234B and 234C of the Income Tax Act.

Interest u/s 234B- If the assessee did not pay the advance tax on the due dates, then he is required to pay penal interest u/s 234B.

Interest u/s 234C- If the assessee did not pay full estimated liability of the advance tax, then he is required to pay penal interest u/s 234B.


Disclaimer: The information contained in the above article are solely for informational purpose after exercising due care. However, it does not constitute professional advice or a formal recommendation. The author does not own any responsibility for any loss or damage caused to any person, directly or indirectly, for any action taken on the basis of the above article.

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