As the name suggests, Advance Tax is a tax that is paid in advance by the taxpayer as a part of his/her yearly taxes instead of as a lump sum payment. If the person’s tax liability exceeds Rs 10,000 in a financial year, then the person is eligible to pay his/her income tax in advance. Advance tax is a tax which should be paid in the same year the income is earned. Therefore, advance tax is also known as the ‘pay-as-you-earn’ scheme. These Advance Tax payments can be made in instalments depending on due dates issued by the income tax department.
Advance tax is applicable to a person who has sources of income other than his/her primary source. For example, if a person is earning via capital gains, lottery, interest on investments, house property or any other business, other than his salary, then the concept comes under relevant category.
Any refund due fetches about 0.5 per cent of interest for every month, or 6 percent of interest annually, as per income tax refund. However, you’ll be charged 1 percent every month or 12 percent annually, if you don’t pay the advance tax before the due date.
Who should file Advance Tax?
Individual who comes under any one of the following categories, salaried, freelancers and businesses, and his/her total tax liability is more than Rs 10,000 in a financial year then he/she is eligible to pay advance tax. Actually, advance tax applies to all people who pay taxes, freelancers, salaried, and businesses and so on.
For instance, if you are salaried and your employer deducts tax at source (TDS), then you do not need to pay advance tax. But if you have other sources of income by which your income liability exceeds Rs 10,000, then you need to file. Independent professionals and businessmen will have to pay taxes in advance depending on their income through business; the liability can be huge. The same has to be done in the case of companies and corporations. There are some exempt from paying advance tax, such as Senior citizens who are more than 60 years of age and do not own a business.
Presumptive income for Professionals:
According to section 44ADA, independent professionals like architects, lawyers, doctors, and so on come under the presumptive scheme, and they are eligible to pay their advance tax liability in a single payment or in one instalment on or before 15 March. They can also pay all of their tax dues on or before 31 March.
Presumptive income for Businesses:
Under section 44AD, the taxpayers who run a business are covered by a presumptive taxation scheme, and they have to pay the entire amount of their advance tax in a single payment or in one installment on or before 15 March. They also can pay their tax dues on or before 31 March.
When to file advance tax in India?
The due date for self-assessment taxes or Advance tax are 15th of September, December and March, in respective installments of 30 percent, 30 per cent and 40 percent, every year and for non-corporate, the due dates are 15th of June, September, December and March, in respective installments of 30 percent, 30 per cent and 40 percent, every year.
Due Dates for Payment of Advance Tax
Following are the due dates for the Financial Year 2019-20 & Financial Year 2018-19 for both individual and corporate taxpayers
| Due Date | Advance Tax Payable |
| Before or on 15th June | Advance tax of 15% |
| Before or on 15th September | An advance tax of 45% less advance tax already paid |
| Before or on 15th December | An advance tax of 75% less advance tax already paid |
| Before or on 15th March | The advance tax of 100% less advance tax already paid |
Following are the due dates for taxpayers who come under Presumptive Taxation Scheme as per sections 44AD & 44ADA – Business Income
| Due Date | Advance Tax Payable |
| Before or on 15th March | Advance tax of 100% |
How to pay Advance Tax Online in India?
Any individual can file advance tax through the tax payment challan at your nearby bank branches, which are panelled under the Income Tax (I-T) department. Here are some of the banks where you can deposit your advance tax: the Reserve Bank of India, State Bank of India, Indian Overseas Bank, HDFC Bank, ICICI Bank, Indian Bank, and all other authorized banks. There are more than 926 authorized bank branches in India where you can pay your advance tax payments.
You can also pay your advance tax sitting at your home or anywhere online on the official website of the I-T department or the National Securities Depository site. Here is the stepwise procedure to file an advance tax through an online website:
Step 1: Visit the url https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp and click on the relevant challan i.e. ITNS 280, ITNS 281, ITNS 282, ITNS 283, ITNS 284 or Form 26 QB demand payment – for TDS on sale of property as applicable.
Step 2: Enter PAN / TAN as relevant and fill all other mandatory challan information such as accounting head through which the payment is made, address of the taxpayer and the bank in which the payment is to be made and so on.
Step 3: After entering all the needed details, submit the data entered, a confirmation screen will be pop-upped. If PAN / TAN are valid, then the full name of the taxpayer will be exhibited on the confirmation screen.
Step 4: Once completing the previous step, the taxpayer will be directed to the page where you can find your bank’s net banking option.
Step 5: Make the payment on the official bank site in which you have an account.
Step 6: On successfully completing the payment, a challan counterfoil will be displayed which has CIN, payment details and bank name in which e-payment has been done. Keep this counterfoil safe, as it is proof of payment being made.
