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Additional Tax Payment Procedure: What You Must Know

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Last Updated on February 9, 2024 by Kanakkupillai

Who Should Pay Additional Tax?

The additional taxes have to be paid by the organization, salaried individual or freelancer if they pay more than Rs.10000 in total for a fiscal year as their tax liability is more. This obligation applies to all taxpayers, from employees through independent contractors and even commercial entities.

However, if a senior citizen has no business income and is 60 or older, they are exempt from Additional tax. As a result, the only seniors in this age bracket who earn money from businesses must pay Additional taxes.

Businesses using the presumptive taxation method under section 44AD must pay their additional tax in one lump sum by the 15th of March at the latest. These taxpayers also have the option to pay off their whole tax debt before March 31.

In the same way, all professionals who are categorised in section 44ADA on a presumptive basis pay their entire Additional tax payment as a single lump sum instalment due dated before or by March fifteen. These include doctors, lawyers, architects and other professionals. They can also choose to make the full settlement of tax debt by March 31.

Additional Tax Due Dates for FY 2023-24

FY 2022-23 for both individual and corporate taxpayers

Due Date Additional  Tax Payment Percentage
On or before 15th June 15% of Additional  tax
On or before 15th September 45% of Additional  tax less Additional  tax already paid
On or before 15th December 75% of Additional  tax less Additional  tax already paid
On or before 15th March 100% of Additional  tax less Additional  tax already paid

 

For taxpayers who have chosen Sections 44AD and 44ADA – Business Income Presumptive Taxation Scheme

Due Date Additional  Tax Payment Percentage
On or before 15th March 100% of Additional  tax

 

How do you pay Additional  Tax online?

  • Go to the Income Tax Department of India’s official e-filing website.
  • Use the search bar to find the ‘e-Pay Tax’ option or look for the ‘Quick Links’ area on the homepage’s left side.
  • Along with your mobile number, provide your PAN and confirm it. ‘Continue’ should be clicked.
  • Enter the 6-digit OTP that was provided to your mobile device to continue.
  • Select “Income Tax” and then press “Proceed.”
  • Choose the appropriate “Assessment Year” (for example, 2024–2025) and “Additional  Tax (100)” as the “Type of Payment”. Continue.
  • Enter the necessary tax information.
  • Click “Continue” after selecting your desired payment method and bank.
  • After checking the challan’s details, click “Pay Now.” If necessary, you can modify these specifics.
  • You will see an acknowledgement on the screen that follows after the payment has been made. The BSR code and challan serial number should be noted because they are crucial for your tax return. A copy of this receipt should be kept for your records.

Additional Tax Late Payment Interest

You will see an acknowledgement on the screen that follows after the payment has been made. The BSR code and challan serial number should be noted because they are crucial for your tax return. A copy of this receipt should be kept for your records.

Interest under 234C will be charged for Additional late tax payments:

Particulars Rate of Interest Period of Interest Amount on which interest is calculated
If the Additional  Tax paid by 15th June is less than 15% 1% per month 3 months 15% of Amount* (-) tax paid before June 15
If the Additional Tax paid by 15th September is less than 45% 1% per month 3 months 45% of Amount* (-) tax paid before September 15
If the Additional Tax paid by 15th December is less than 75% 1% per month 3 months 75% of Amount* (-) tax paid before December 15
If the Additional Tax paid by 15th March is less than 100% 1% per month 1 month 100% of Amount* (-) tax paid before March 15

 

Additional Tax Calculation

Following the instructions and advice below will make it simple for you to determine your Additional  tax obligation:

Step 1: Assess your income for the pertinent financial year for which you are doing the Additional tax assessment in step 1. Think about the following income ranges:

  • Interest income from sources like fixed deposits and savings accounts.
  • Capital gains.
  • Professional income.
  • Rental income.
  • Income of minors, if combined with the taxpayer’s income.
  • Any other sources of income.

Step 2: Add your pay to the total sum determined in Step 1 to determine your gross taxable income. Even Though Additional tax does not directly apply to your wage, this total income may impact your tax bracket and, ultimately, your overall tax obligation.

Step 3: Calculate the due tax amount by using the current income tax slab that applies to your circumstances.

Step 4: Subtract the anticipated or subtracted amount of Tax Deducted at Source (TDS) by the applicable slab.

You must pay Additional taxes if your tax liability after the TDS deduction exceeds Rs. 10,000.

INCOME ESTIMATION FOR Additional  TAX AMOUNT (Rs) AMOUNT (Rs)
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 Additional  31,464

 

Additional  TAX PAYMENTS
Due date Additional  tax payable Amount (Rs)
15th June 15% of Additional  tax 4,700
15th September 45% of Additional  tax 14,100
15th December 75% of Additional  tax 23,600
15th March 100% of Additional  tax 31,400

 

Exemptions for Additional Tax Payments:

  • Seniors who are 60 years of age or older are exempt from the requirement to pay Additional taxes.
  • Additional tax payments are not necessary for salaried individuals who are subject to Tax Deducted at Source (TDS). However, income from sources other than wages, such as interest, capital gains, rental income, and others, will need payment of Additional taxes.
  • There is no need to satisfy the Additional tax requirement if the TDS deduction exceeds the annual tax liability.

Benefits of Paying Additional Tax

  • Reduces Taxpayer tension: Taxpayers’ tension is reduced when they pay their taxes in Addition. This proactive strategy eliminates worries regarding last-minute financial limits or tax obligations.
  • Accelerates Tax Collection: By accelerating tax collection, Additional tax enables the government to amass funds more quickly.
  • Increases Government Funds: By accepting Additional tax payments, the government can increase its cash reserves and earn interest on the money it has already received.
  • Prevents Tax Defaults: By paying taxes in Addition, people are kept from accidentally failing to pay their taxes on time.
  • Facilitates Financial Planning for Businesses: Businesses who pay their taxes and receive insight into their annual income trends and better financial management of their finances.

Forms Required for Additional  Tax:

Challan No. ITNS 280 is a necessary form to pay Additional tax liabilities correctly. 

Conclusion

Stress reduction, easier tax collection, improved financial planning, and default prevention are all benefits of paying taxes in advance. Kanakkupillai offers guidance for completing complicated supplementary tax payments, accurately estimating income, submitting forms, assuring compliance, and averting fines. Don’t allow the complexity of extra tax payments to overwhelm you. Contact Kanakkupillai today; our professionals will help you simplify the process.

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