Advance tax meaning-

Advance tax is like paying a part of your income tax bill in advance before the end of the financial year. Instead of waiting until the year ends to pay taxes as you earn, advance tax requires you to estimate your total income for the whole year and pay taxes periodically throughout the year. These payments are made in installments on specific dates set by the tax authorities.

You can use special payment forms at bank branches that are authorized and approved by the Income Tax Department to pay advance tax. These forms allow you to deposit your tax payment in any of the authorized banks.

Another way to pay advance tax is by using the Income Tax Department's online tax payment website or the National Securities Depository, which makes it easy to pay taxes electronically.

Who should pay advance tax?

• In case your annual tax liability exceeds Rs 10,000, you have to pay an advance tax payment. Everyone is bound by this rule, no matter whether they run a business, work as a freelancer, or earn a salary.
• You are exempt from paying advance tax if you are 60 years of age or older and do not get income from a business. However, advance tax payment is still necessary if you're a senior citizen and have business income.
• By March 15th, taxpayers who opted for the presumptive taxation scheme are required to pay their entire advance tax liability in a single installment. Additionally, they can choose to settle all of their tax dues before March 31st.
• Self-employed professionals, such as doctors, lawyers, architects, etc., must pay their entire advance tax payment by March 15th in one installment according to the presumptive taxation scheme. Alternatively, they have the option to make the full payment before March 31st.
• Your tax liability should be at least ₹10,000 or higher.
• You should be either self-employed or receiving a salary.
• If you win in a lottery, you need to pay taxes on your winnings.
• If you earn rent from a house you own, that counts as income, too.
• Income earned or received through capital gains on shares
• Fixed deposit interest earned.
• Income earned from capital gains on shares is also subject to taxation.
• You also have to pay taxes on the Interest earned on a fixed deposit.

Due Dates of Advance Tax for FY 2023–2024

FY 2023–2024 for taxpayers, including individuals and corporations:

Due Date of for The percentage of advance tax payments

By June 15th: 15% of the total tax

By September 15th: 45% of the total tax - advance tax that has already been paid.

By December 15th: 75% of the total tax - advance tax that has already been paid.

By March 15th: 100% of the total tax - advance tax that has already been paid.

For taxpayers under sections 44AD & 44ADA - Business Income who have taken the option for the Presumptive Taxation Scheme:

Due Date for Percentage of Advance Tax Payment

By March 15th - 100% of the advance tax

Steps for Online Advance Tax Payment

1. Go to the Income Tax Department of India's online filing portal.
2. Select the 'Quick Links' section located on the left side of the home page and then select the 'e-Pay Tax' option. You can also use the search bar to search for "e-Pay Tax."
3. Enter your PAN on this screen, then enter it again to confirm. After that, click "Continue" after entering your mobile number.
4. Next, enter the 6-digit OTP that you received on your phone, then select "Continue."
5. Choose the first "Income Tax" box and press "Proceed."
6. Click "Continue" after choosing "Assessment Year" as 2024–25 and "Type of Payment" as "Advance Tax (100)".
7. Fill out all tax details.
8. Press 'Continue' after choosing the bank and payment method.
9. Review the challan information and select "Pay Now." You may also "Edit" these data if that's necessary.
10. An acknowledgment will appear on the following screen once the payment has been completed. On the right side of the challan, you can find the BSR code and the serial number. For future use, keep a copy of this tax receipt. At the time of your next tax return, you need to enter the challan number and BSR code.

Things to keep in mind while paying advance tax

• Challan No. ITNS 280 must be filed before deadlines, which has the following preconditions-
• Correct PAN Details must be shared to avoid tax being placed in someone else's name.
• Correct assessment year must be selected as the tax is paid in advance for the following financial year.
• Taxpayers must choose a payment type: advance tax for the same fiscal year based on estimated income or self-assessment tax after the end of the financial year.
• A Challan Identification Number (CIN) will be provided after the receipt of payment, which must be recorded and used in the income tax return.

Advance Tax Challan 280 meaning

Challan 280 allows users to pay income taxes online on the Income Tax Department of India's website. To pay taxes online or offline, one must first choose this challan on the website, fill out the form, and use it to pay taxes. If you want to pay your taxes offline, download and print the Challan 280 form from the Income Tax Website, fill in the details, and take it to the bank.

Steps for Calculating Advance Tax Liabilities

• Estimate your income to be earned for the financial year, including Interest, rental, capital gains, and professional income.
• Calculate the cost associated with expected income.
• Calculate deductions under Chapter VIA.
• Calculate the overall tax payable.
• Consider tax slab rates, tax rebate under Section 87A, and TDS deducted by other taxpayers on your income.

Payment of Interest on advance tax

1. Interest under 234B will be charged if you fail to pay advance tax. By March 31st, you must pay at least 90% of the entire taxes as advance tax, according to Section 234B. If taxes are not paid in advance, Interest at the rate of 1% will be charged.
2. A failure to pay advance tax on time will result in Interest under 234C.

Advance tax refund

The IT department will reimburse any overpayment made if the Income Tax Department finds out at the end of the financial year that you have paid more tax than you should have. The taxpayers can get their refund by filling out Form 30. Within a year of the previous assessment year, the taxpayer must file a claim to get the refund.