Advance Tax Payment: A Comprehensive Guide For You


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Income tax payment becomes a tedious task, especially if you are paying late at the end of a financial year with the due date just round the corner. So, why not consider advance tax payment? Read on to know more

When it comes to tax, it is always better to pay off the dues in advance as compared to waiting for the last moment to make the payment. As such, income tax calculation and payment is a tiring task  and thus the sooner you make the payment, the better it is.

As the name suggests, advance tax payment means payment of income tax in advance. Advance tax payment is also known as ‘pay as you earn’ and it is not a very complicated process. Let us understand it in detail.

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What is Advance Tax Payment?

As discussed above, advance tax payment means paying your annual income tax well in advance for the entire income earned in a financial year. In normal circumstances this is the tax that is paid after earning a certain income. However, in case of advance tax payment and as per the rules of advance tax, the person paying the tax in advance has to make an estimation of the income for the current financial year. As per that estimation, the tax is paid in advance at particular time durations. But you must note that advance tax payment is possible only if the tax liability of the taxpayer is more than INR 10,000 in a financial year. Moreover, the advance tax should be paid within the fiscal year in which you are likely to receive the income.

Advance tax is applicable in cases when the income is earned from varied sources such as investments, rents, lottery, business etc., and not just from the salary of a person. It is possible to make the advance tax payment online or through some specific banks.

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Who all can pay Advance Tax?

Anyone who has tax liability of INR 10,000 and beyond can pay advance tax. Thus, those with tax liability below 10,000 in a fiscal year are not likely to consider advance tax payments. Moreover, if a taxpayer understands their tax liability well, they would not require to pay more than the least amount as advance tax.

You may like to know that:

  • People working in an organization and earning a salary as well as the self-employed can pay advance tax
  • Advance tax applies to individuals in every profession and for people of every budget
  • People earning wealth through shares as capital gains can also pay advance tax
  • People earning interest from fixed deposit are also liable to pay advance tax
  • If you earn money through winning lottery or a game show etc., you are still liable to pay advance tax
  • People earning rent from property can also pay advance tax

The basic criteria for paying advance tax is that the estimated liability of tax of a person must be 10,000 or more for a financial year. However, Senior citizens of 60 years and above with no regular income are exempted from paying advance tax.

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What is the Right Time to File for Advance Tax?

The advance taxes can be filed on every 15th of the month of March, September, and December. It can be paid in installments in case of non-corporate, while corporate need to make the payment on the 15th of each quarter of a financial year such as March, June, September, and December.

Advance tax payment can be done on income that doesn’t fall under the category of TDS deduction unlike in the case of salary, which comes under TDS deduction.

Process to Make Advance Tax Payment

By following some simple steps, advance tax payments can be done in case of income that cannot be deducted under TDS. They include income coming from people who are self-employed, people who run businesses, capital gains and so on.

Advance taxes can be paid online or offline via challan 280. In case of companies, advance tax is generally paid by the accounts department via challan 280 on every 15th of each quarter during a fiscal year in March, June, September, and December.

How to pay advance tax online?

Here is how to deposit advance tax online:

  • It can be made through the portal of the Income Tax Department.  All you need is to have an account on the portal to make the online transaction
  • Log on to the portal with your account details and pick the option of challan 280, which is used to make payments of different kinds of taxes
  • Now choose the ‘100 advance tax’ option
  • Complete the form by filling all the required details like address, phone number etc.
  • Make the payment using a secured payment gateway
  • You will get a receipt of payment generated by the portal. Save it for future reference
  • You would need the receipt at the time of filing IT returns in the year of assessment

Offline Advance Tax Payment

  • For offline, the advance tax payment can be made at a bank branch approved by the income tax department for the purpose of advance tax payment collection.
  • Here also, you need challan 280  to make the payment, which can be done by getting income tax challan download
  • Pay due attention at the time of filling the form
  • Now, submit the form at the counter along with advance tax payment in the form of cash or cheque
  • Make sure to get the receipt of the payment from the counter
  • ICICI bank, Syndicate bank, State bank of India, Reserve bank of India, HDFC bank, Axis bank, Punjab national bank etc. are some of the authorized banks where the offline payment of advance tax can be made.

If you want to know when does one have to pay advance tax, here are the dates for 2022-23:

Advance Tax Payment Due Date Advance Tax Amount to be Paid
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

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To Conclude

In case the taxpayer pays more than what is liable on them, the income tax department refunds the extra money paid at the end of the financial year. Taxpayers can claim for the refund by submitting form 30. The claim needs to be filed within 1 year of the previous assessment year. If you do not want to pay more than what is due on you, you must calculate the tax that you are required to pay. If you do not know how to calculate advance tax, you can do so by using an advance tax premium calculator.    

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FAQs on Advance Tax Payment

What is advance tax payment?

Advance tax payment refers to the system of paying income tax in installments throughout the financial year, instead of paying it as a lump sum at the end of the year. It is also called "pay-as-you-earn" (PAYE) tax. This system is applicable to individuals, self-employed professionals, and businesses with taxable income.

Who needs to pay advance tax?

Individuals, self-employed professionals, and businesses with taxable income of more than Rs. 10,000 in a financial year are required to pay advance tax. This includes income from sources such as salary, business, profession, capital gains, and other sources.

What are the due dates for advance tax payment?

The due dates for advance tax payment depend on the type of taxpayer. For individuals and businesses, the due dates are:

15% of the total tax liability by 15th June of the financial year
45% of the total tax liability by 15th September of the financial year
75% of the total tax liability by 15th December of the financial year
100% of the total tax liability by 31st March of the financial year
For companies, the due dates are different and depend on the type of company.

What happens if advance tax is not paid?

If advance tax is not paid, then the taxpayer may be liable to pay interest under Section 234B and 234C of the Income Tax Act. Interest under Section 234B is charged if the taxpayer has not paid at least 90% of the tax liability by the end of the financial year. Interest under Section 234C is charged if the taxpayer has not paid the due amount by the due date. Additionally, non-payment or delayed payment of advance tax can also lead to penalty and prosecution.

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Nov 07, 2022
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PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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