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What is Advance Tax?

Advance Tax is the total amount of income tax paid in advance rather than in a chunk at the end of the financial year. Advance Tax is to be paid in instalments on the due dates set by the income tax department. Payment of the 2nd Installment of Advance Tax before 15th September, Q2 Advance Income Tax Payment FY 2020-21.

Who has to pay Advance Tax?

Salaried, freelancers and businesses must pay advance tax if their total tax liability is Rs 10,000 or more in a fiscal year. All taxpayers, salaried, freelancers, and businesses, are subject to advance tax. Elderly individuals as old as sixty years of age and older who do not own a business are exempt from paying advance tax.

How is advance tax calculated?

Advance tax can be determined by applying the applicable slab rate to a fiscal year to his estimated total revenue in that year.

Important dates in advance income tax

1. On or before 15th June
2. On or before 15th September
3. On or before 15th December
4. On or before 15th March

Which forms are required in advance tax?

No. of Challan ITNS 280 is the form that must be completed and returned by the due dates. Challan No. Prerequisites ITNS 280 consists of the following:

PAN Details: Make sure you publish the correct PAN details, or your tax will be deposited in the name of someone else.

Assessment Year: Select the right assessment year for which the tax is to be paid since it’s being sent out in advance for the upcoming fiscal year.

Selecting the type of payment: In the form, the taxpayer must select the type of payment. If at all the tax is paid for the same financial year based on estimated income, it is considered an advance tax. And also, if the tax is paid after the end of the fiscal year, it is self-assessment tax.

 

Why is Advance Tax is critical?

One of the main reasons advance tax payment is crucial is that it is the taxpayer’s responsibility to estimate their income and then calculate the estimated tax to determine whether they need to pay advance tax.

FAQs

What if I pay advance tax less or more than required for a financial year?

You will receive a refund if you pay more in advance tax than your total tax liability. If your amount exceeds 10% of your tax liability, the Income Tax Department will pay a 6% annual interest rate on the excess amount.

What is the penalty for missing the dates of payment of Advance Tax?

Failure to pay advance tax is punishable by a penalty of 1% simple interest per month or part of a month under Section 234B. The penalty interest is calculated on the amount of unpaid advance tax.

Can I claim a deduction under 80C while estimating income for determining my advance tax?

Yes.

Will an NRI be liable for payment of advance tax?

An NRI is required to pay advance tax if their income in India exceeds Rs 10,000. I am a senior citizen with pension and interest earnings.

When should I pay advance tax?

Due Date	Advance Tax Payable
On or before 15th June	15% of advance tax
On or before 15th September	45% of advance tax less advance tax already paid
On or before 15th December	75% of advance tax less advance tax already paid
On or before 15th March	100% of advance tax less advance tax already paid

 

I’m a senior citizen with having a pension and interest income. Should I pay advance tax?

Senior citizens, who are sixty years or older, and do not run a business, are exempt from paying an advance tax.

Will I be penalized if I don’t pay advance tax?

The taxpayer is liable for interest under Sections 234B and 234C for failing to pay advance tax. Section 234B enforces interest if the taxpayer has not placed advance tax or transferred advance tax is less than 90% of the total tax liability.

What will happen if I miss the deadline for payment of the second instalment?

You will have to pay interest on the tax due till the next instalment.

How to make advance income tax payments digitally?

1. Visit the Income Tax Department’s website and use the e-payment option.
2. Select the appropriate form for Advance Tax payment. Individuals should take ITNS 280.
3. Choose the appropriate Advance Tax code. The applicable code number is 100.
4. Fill in your PAN, name, address, email address, phone number, and so on.
5. When you click Proceed, you will be redirected to the net banking page or debit card payment gateway, depending on your preference.
6. Make your payment.

After making the payment, you will see the Challan 280 receipt on the next screen. Make a copy of it because you will need it when filing your ITR.

Why should advance tax payments be made?

By paying in advance, you enable both the government and yourself by not having to pay the entire tax bill all at once at the end.

How can you check your advance tax payment status?

For checking the status of your advance tax payment challan, visit the website https://tin.tin.nsdl.com/oltas/index.html. Click CIN (Challan Identification Number) Based View. Further, enter the required details being asked for in order to view the status.

 

How will you write a cheque for advance tax payment?

If you prefer to pay by cheque, make it payable to the “Income Tax Department.”

 

How can I download my advance income tax payment receipt?

1. Login to Net Banking, your concerned bank.
2. Select e-Tax and then Reprint Challan.
3. Specify the Date to reprint Challan.
4. You’ll get a list of all challans, click and download PDF as required.

 

How can SattvaCFO support paying the 2nd Installment of Advance Tax before 15th September?

The SattvaCFO team are trusted advisors who can assist startups/growing companies in adhering to the most recent tax rules and regulations. Outsourcing SattvaCFO services will guide you in ensuring your company’s compliance with an advance income tax regulation. Payment of the 2nd Installment of Advance Tax before 15th September, Q2 Advance Income Tax Payment FY 2020-21.