Paying advance income tax is a crucial responsibility for taxpayers in India, especially for individuals and businesses with significant tax liabilities. Advance tax payments help reduce the year-end tax burden and ensure compliance with the Income Tax Act of 1961. This guide will walk you through the complete process of advance income tax payment online in India, including its importance, eligibility criteria, due dates, calculation methods, and a step-by-step process to make payments online.
What is Advance Income Tax?
Advance income tax refers to the payment of income tax in installments before the end of the financial year rather than making a lump sum payment at the time of filing the Income Tax Return (ITR). According to the Income Tax Act, if an individual or business has a tax liability of ₹10,000 or more (after adjusting TDS), they are required to pay advance tax.
Who Needs to Pay Advance Tax?
The following taxpayers are liable to pay advance tax in India:
- Salaried individuals – If they have additional income from sources like capital gains, rent, or business.
- Self-employed professionals – Doctors, lawyers, consultants, freelancers, etc.
- Business owners – Sole proprietors, partnerships, and companies with taxable income.
- Senior citizens – Exempted from paying advance tax if they are above 60 years of age and have no income from business or profession.
Advance Tax Payment Due Dates for FY 2024–25
The government has fixed specific due dates for the payment of advance tax during the financial year:
| Due Date | % of Advance Tax Payable | Applicability |
|---|---|---|
| 15th June | 15% of total tax liability | For individuals and businesses |
| 15th September | 45% of total tax liability (cumulative) | For individuals and businesses |
| 15th December | 75% of total tax liability (cumulative) | For individuals and businesses |
| 15th March | 100% of total tax liability (cumulative) | For individuals and businesses |
Note: Taxpayers opting for the presumptive taxation scheme under Section 44AD and Section 44ADA need to pay the entire advance tax liability in one installment by 15th March.
How to Calculate Advance Tax?
You can calculate your advance tax liability using the following formula:
Advance Tax = (Estimated Total Income – Deductions) × Applicable Tax Rate – TDS
Example:
- Estimated Total Income = ₹12,00,000
- Applicable Tax Slab Rate = 30% (based on current tax rates)
- Deductions under Section 80C, 80D, etc. = ₹1,50,000
- TDS already deducted = ₹20,000
Advance Tax Liability = ₹(12,00,000 – 1,50,000) × 30% – ₹20,000
= ₹10,50,000 × 30% – ₹20,000
= ₹3,15,000 – ₹20,000
= ₹2,95,000
Now, you need to pay 15% (₹44,250) by 15th June, 45% (₹1,32,750) by 15th September, 75% (₹2,21,250) by 15th December, and 100% (₹2,95,000) by 15th March.
How to Pay Advance Income Tax Online in India
Paying advance income tax online is simple and convenient through the Income Tax Department’s e-filing portal. Here’s a detailed step-by-step guide to help you make advance tax payments online in India:
Step 1: Visit the Income Tax Department’s e-Filing Portal
- Open your web browser and visit the official Income Tax Department website: https://www.incometax.gov.in
Step 2: Log in to Your Account
- Click on “Login” at the top right corner of the homepage.
- Enter your PAN (Permanent Account Number) as the user ID, password, and captcha code to log in.
- If you’re a first-time user, click on “Register” and follow the steps to create an account.
Step 3: Navigate to the Payment Section
- Once logged in, go to the “e-File” tab on the top menu.
- From the dropdown menu, select “e-Pay Tax.”
- You will be redirected to a new page to initiate the tax payment process.
Step 4: Select the Type of Tax Payment
- On the payment page, select “Advance Tax (ITNS 280)” from the list of available tax payment options.
- Choose the Assessment Year for which you are making the payment (e.g., FY 2024–25 = AY 2025–26).
- In the Type of Payment field, select “Advance Tax.”
Step 5: Enter Payment Details
- Calculate your advance tax liability based on your estimated income and deductions.
- Enter the exact amount of tax you need to pay.
- Choose your preferred payment method – Net Banking, Debit Card, UPI, or RTGS/NEFT.
Step 6: Confirm Payment
- Double-check all the details you’ve entered, including the tax amount and payment method.
- Click on “Proceed” to initiate the payment process.
- You will be redirected to your bank’s payment gateway to complete the transaction.
Step 7: Download the Payment Receipt
- After a successful transaction, you will receive a Challan Identification Number (CIN).
- Save or download the payment receipt for future reference and during ITR filing.
- You can also verify the payment status under the “Payment History” section on the e-filing portal.
Important Tips:
- Always pay advance tax before the due dates to avoid penalties under Section 234B and Section 234C.
- Make sure your bank account has sufficient funds to avoid transaction failure.
- Keep the payment receipt safe, as it acts as proof of payment during tax filing.
By following these steps, you can easily pay advance income tax online in India without any hassle.
Penalties for Non-Payment or Delayed Payment of Advance Tax
Failure to pay advance tax on time may attract penalties under Section 234B and Section 234C of the Income Tax Act:
- Section 234B: If you fail to pay 90% of your tax liability by 31st March, a penalty of 1% per month will be charged until full payment.
- Section 234C: If you fail to pay the required installment by each due date, a penalty of 1% per month on the shortfall will be charged.
Benefits of Paying Advance Tax
- Avoids last-minute payment stress during ITR filing.
- Prevents interest and penalties under Section 234B and 234C.
- Ensures better cash flow management for businesses and professionals.
- Allows the government to manage tax collection efficiently.
- Reduces the burden of a large tax payment at the end of the year.
FAQs on Advance Income Tax Payment
1. Can I pay advance tax offline?
Yes, you can pay advance tax offline at authorized bank branches using the challan form ITNS 280.
2. What happens if I pay excess advance tax?
If you have paid more tax than required, you can claim a refund while filing your Income Tax Return (ITR).
3. Can I revise my advance tax payment?
Yes, you can make additional payments or adjust the payment amount in subsequent installments.
4. Is senior citizen exempt from advance tax?
Yes, senior citizens without business income are exempt from advance tax payments.
5. What if my income changes during the year?
If your income increases or decreases, you can recalculate the tax liability and adjust the next advance tax installment accordingly.
Conclusion
Paying advance income tax on time is essential to avoid penalties and manage your tax obligations effectively. By following the step-by-step process mentioned above, you can easily calculate and pay your advance income tax online in India. Make sure to keep track of due dates and monitor any changes in your income to adjust your tax payments accordingly.
Stay compliant and stress-free by managing your advance tax payments efficiently!