Online Advance Tax Payment: A Guide to Pay Income Tax online

Written by : Knowledge Centre Team

2024-08-02

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If you are earning more than 2.5 lakhs per year, you are liable to pay income tax and file returns. The taxation system in India runs on three pillars - Tax Deducted at Source (TDS), Self-Assessment Tax and Advance Tax payments. You will need to pay advance tax if you expect your tax liability to be more than Rs 10,000 in the financial year.

However, if you receive a salary from your employer, your tax amount will be deducted from your salary under TDS by your employer. The advance tax also applies to the income from other sources and lottery winnings, etc. If you have not paid any advance taxes and at the time of filing ITR, you have a tax liability, you need to pay the balance tax.

What is the Self-Assessment Tax?

You need to ensure full payment of your tax-dues before you can submit your income tax return (ITR). If there are any dues, you may see it at the time of filing your return. These dues can be paid under the Self-Assessment Tax.

You need to pay this tax online to ensure successful e-filing. Delayed payment of advance tax; i.e. after 31 March, will attract interest under section 234B and 234C along with your tax due. So, make sure to be on time with taxes.

Steps to Pay Tax Online

Once you know you have a tax liability, you can pay it online and make it zero. There are only two modes of payments through which the Income Tax Department receives payment - Debit Card and Net Banking. Payment through credit cards or UPI is not allowed. Below are the steps you need to follow to pay your taxes:

Step A

Visit the Tax Information Network, you will see a number of options on the home page. You need to select NON-TDS/TCS (CHALLAN NO./ITNS 280).

Step B

Once you proceed with this option, on the next page you need to provide the below information.

a) Tax Applicable - Select Corporation Tax in case you are filing tax for a company or Income Tax if you are not a company.

b) Type of Payment - You will see options like Advance Tax, Surtax, Tax on Distributed Profit, Accretion Tax, Self-Assessment Tax, etc. To pay your tax liability you need to select 'Self-Assessment Tax'.

c) Mode of Payment - Select the mode of payment through which you want to clear your tax liability. You can select one of the two - Net Banking or Debit Card.

d) PAN and Assessment Year - Provide your PAN and select the assessment year from the drop-down box for which you want to make the payment. Make sure you select the correct assessment year. It is the year immediately next to the financial year for which you are filing the return.

For example, if your financial year is 2019-20 your assessment year would be 2020-21. In another way, the financial year is the year in which your income accrues, while the assessment year is the year in which you file the ITR for that income.

e) Address and Other Details - In the last part of this step, you need to provide your address, email address and phone number. Verify all the details provided, enter Captcha and proceed to the next page.

Step C

The new page will have a summary of the details you have provided in the previous step. Double verify all the information. Tick mark the consent box (I agree) and click on 'Submit to the Bank'.

Step D

You will be directed to the Bank's payment page. Complete your payment. Once the payment is received by the bank, a receipt will be generated, known as Challan 280. This will contain your payment details, BSR Code and Challan serial number.

Declare the Paid Taxes

After depositing the tax amount, you need to ensure that this information shows up in your ITR. You can do this by visiting the official income tax website. On the website, you need to click on 'File income tax return'. You need to provide the 7 digits BSR number and 5 digits Challan serial number and other details required to submit your form.

How to Calculate and Pay Advance Tax?

If you are a salaried but receiving income from capital gain, or you are a freelancer, or you are running a business. In these cases, you need to pay advance tax. You will have to calculate your total income from various sources as per the Indian taxation rules. If you are a freelancer, you need to calculate your annual income first before estimating tax liability.

To calculate expenses, take into consideration the rent of your workplace, mobile and internet bills, travel expenses, etc. Also, include your tax saving investment. Once you have all the numbers, you can calculate your tax liabilities.

You can pay advance tax using the above process; the only change will be in Step B. Instead of choosing 'Self-Assessment Tax', you should choose 'Advance Tax'.

How to Save Tax?

You can save tax or reduce your tax liability legally under Indian taxation laws. You should know that each tax saving option has a certain exemption limit. You can save your income going to taxes by investing your money in some of the below tax-saving investments:

Section 80C, 80CCC, 80CCD - Deductions on Investments	You can claim a total deduction of Rs 1.5 lakh on your taxable income under these sections for investments like: Premium paid for pension or annuity plans of a life insurance company Contribution to pension account (EPF, NPS, etc.) Life insurance premium Principal repayment on home loans Investment to ELSS Funds and ULIP Plans
Section 80GG – House Rent Paid	Use this section if you do not receive HRA but pay house rent
Section 80 TTA – Interest on Savings Account	Deduction of up to Rs 10,000 from Gross Total Income for Interest received on savings bank account
Section 80E – Interest on Education Loan	Interest paid on education loan for higher studies
Section 80D – Medical Insurance	Premium paid for Medical Insurance for yourself, spouse and children (i.e. your family) and for your parents is eligible for deduction under this section

Ideally, your tax-planning should start with the income and at the beginning of the financial year. This will help you spread the tax-saving investments over the year and maximize your savings.

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