How to Pay Advance Tax Online

Advance income tax is payment made beforehand rather than at the end of the financial year. It is to be paid in instalments as per the due dates notified by the income tax department. It is also known as ‘pay as you earn’ and needs to be paid in the same year of earnings.

In today’s busy lifestyle, you can avail yourself of online payment options to avoid last-minute hassles. Advance income tax also helps mitigate stress that a taxpayer might undergo during tax payments at the end of the financial year; paying advance tax helps one as it does not involve shelling out taxes in a lump sum at the end of the financial year.

If you’re wondering how to pay advance tax online, we will explore a stepwise process of how you can go about it.

Advance tax calculator – calculate advance tax liability

You can use online calculators on various financial platforms to determine your advance tax liability. These tools require inputs such as your estimated annual income, deductions, and applicable tax rates to compute the amount payable. Accurately calculating the income and deductions is crucial for precise calculations.

What is advance tax?

Advance tax is the income tax payable if your total tax liability exceeds ₹10,000 in a financial year. It applies to various income sources beyond regular salaries, including rent, capital gains, lottery winnings, and fixed deposits. Timely payment of advance tax helps avoid interest penalties and ensures compliance with tax regulations.

Who should pay advance tax?

The following categories of taxpayers are required to pay advance tax:

• Salaried Individuals: While employers deduct tax at source (TDS) on salaries, individuals with additional income from sources like interest, rent, or capital gains may need to pay advance tax.
• Freelancers and Professionals: Those earning income without TDS deductions must assess and pay advance tax.
• Businesses: Both corporate and non-corporate entities are obligated to pay advance tax on their profits.

Advance tax due dates for FY 2024-25

For the financial year 2024-25, advance tax payments are scheduled as follows:

• On or before 2024 15th June: 15% of the advance tax liability.
• By 15th September 2024: 45% of the advance tax liability, less the amount paid in the previous instalment.
• By 15th December 2024: 75% of the advance tax liability, less the amounts paid in earlier instalments.
• By 15th March 2025: 100% of the advance tax liability, ensuring the entire tax is paid before the financial year ends.

How to pay advance tax online?

Let us go through the steps and clarify how to make advance tax payments online for your quick reference.

• Step 1: Go to the e-filing portal of the Income Tax Department of India.
• Step 2: Go to the ‘Quick Links’ section on the home page and click the ‘e-pay tax’ option. Taxpayers can also search ‘e-pay tax’ in the search box.
• Step 3: On the next page, insert your PAN and re-enter to confirm it. Then, type your mobile number and click ‘continue.’
• Step 4: You will receive a 6-digit OTP on your registered mobile number. Enter the OTP and ‘continue.’
• Step 5: Select the first box labelled as ‘Income Tax’ and click on ‘Proceed.’
• Step 6: Go to the ‘Assessment Year’ as 2024-25, select ‘Type of Payment’ as “Advance Tax (100)’ and click on ‘Continue.’
• Step 7: Enter tax details in the next screen.
• Step 8: Select your desired payment bank and click on ‘Continue.’
• Step 9: You can preview the challan details and click ‘Pay Now’. You may also ‘Edit’ your shared details if required.

This is how to make advance tax payments online through a few easy steps. Once payment is made, you will receive an acknowledgement on the next screen. Check the challan serial number and the BSR code on the right side of the advance tax payment challan. You will need these details while filing your income tax return and future references related to tax issues.

What is advance tax late payment interest?

Failure to pay advance tax on time results in interest penalties under Sections 234B and 234C of the Income Tax Act:

• Section 234B: Applies if advance tax paid is less than 90% of the assessed tax. Interest at 1% per month is charged on the shortfall from April 1st of the assessment year until payment.
• Section 234C: Pertains to delays in instalment payments. A 1% per month interest is levied on the deferred amount for each month of delay.

How is advance tax payment calculated?

To calculate advance tax:

1. Estimate Total Income: Include all income sources such as salary, business profits, interest, and capital gains.
2. Deduct Allowances and Exemptions: Apply eligible deductions under sections like 80C, 80D, etc.
3. Compute Tax Liability: Apply the prevailing income tax rates to the net taxable income.
4. Subtract TDS: Deduct any tax already withheld at source.
5. Determine Advance Tax: If the remaining tax liability exceeds ₹10,000, you're required to pay advance tax as per the specified instalments.

Conclusion

Now that you know how to pay advance tax online, you can explore options to save on taxes. For instance, taxpayers can claim deductions on health insurance premiums under Section 80D of the ITA. Talk to a financial expert to clear doubts before making any tax-related decisions. Paying advance tax on time is crucial for financial discipline and tax compliance. Just as selecting the right health insurance policy or maternity insurance policy ensures financial security during medical emergencies, timely advance tax payments prevent last-minute financial stress and penalties.

Disclaimer: The information provided in this blog is for educational and informational purposes only. It is not intended as a substitute for professional advice, diagnosis, or treatment. Please consult your general physician or another certified medical professional for any questions regarding a medical condition. Relying on any information provided in this blog is solely at your own risk, and ICICI Lombard is not responsible for any effects or consequences resulting from the use of the information shared.