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What is Advance Tax?

Last Update Date : April 26, 2019
Estimated Read Time: 5 min

How to pay advance tax?

Advance Tax is a form of income tax calculated on your estimated annual taxable income. It is paid in four quarterly instalments throughout the financial year, hence it is also known as “pay-as-you-earn” scheme.

Based on your estimated total taxable income for the financial year, if your tax liability exceeds Rs 10,000, after TDS deduction, you are required to pay advance tax.

Read this article by H&R Block to calculate and pay your advance tax on time and avoid late payment penalties.

Important Note: 15th June 2019 is the due date to pay the 1st Installment of Advance Tax for FY 19-20.

Who is liable to pay Advance Tax?

Advance tax applies to you if your estimated tax liability after TDS deduction exceeds Rs 10,000

In general, if you are a salaried individual, you need to pay advance tax only if you have additional income such as capital gains on shares, rental income, interest on fixed deposits, winnings from lottery, etc.

Is Advance Tax payable by Senior Citizens?

Under section 207 of the Income Tax Act (1), resident senior citizens are exempt from paying advance tax if they do not have any profits or gains from business or profession.

Advance Tax Payment Due Dates

You are expected to pay a percentage of total advance tax payable according to the following dates for the F.Y. 2019-20:

Due DateAdvance Tax Payable
On or before 15th June15% of estimated advance tax
On or before 15th September45% of estimated advance tax less advance tax already paid
On or before 15th December75% of estimated advance tax less advance tax already paid
On or before 15th March100% of estimated advance tax less advance tax already paid

 

Side Note: The due date for persons under the presumptive scheme is 31st March for 100% of the tax payable.

How to pay Advance Tax?

Advance Tax can be paid online as well as offline. However, the online method is the fastest. Both public and private banks are authorized to collect advance tax payment, including RBI.

List of Authorised Banks
Allahabad BankAndhra BankAxis Bank
Bank of BarodaBank of IndiaBank of Maharashtra
Canara BankCentral Bank of IndiaCorporation Bank
Dena BankHDFC BankICICI Bank
IDBI BankIndian BankIndian Overseas Bank
Jammu and Kashmir BankOriental Bank of CommercePunjab & Sindh Bank
Punjab National BankState Bank of IndiaSyndicate Bank
UCO BankUnion Bank of IndiaUnited Bank of India
Vijaya Bank

 

Advance Tax Payment Online

  • Step 1: Visit the official TIN tax e-payment page (2).
  • Step 2: Under “Non-TDS/TCS”, choose “Challan No./ITNS 280” and click “Proceed”.
  • Step 3: You will be redirected to Challan 280, which must be filled in 30 minutes.
  • Step 4: Enter the captcha code and click “Proceed”. The name on your PAN would appear.
  • Step 5: Click “Submit”.
  • Step 6: You will be redirected to the Net Banking page of your bank.
  • Step 7: Double check the information before you make the payment.
  • Step 8: You will get a receipt after the payment is successful. Save a copy or take a screenshot of it.

Side Note: In case your bank is not listed under Net banking/Debit card payment, someone else holding an account with any of the authorised banks, can make the payment on your behalf.

Offline method to pay Advance Tax:

  • Step 1: Visit your nearest authorised bank branch.
  • Step 2: Ask for Challan 280 to the bank executive.
  • Step 3: Fill the form accurately.
  • Step 4: Submit the form along with the advance tax payment.
  • Step 5: After payment, you shall receive a receipt confirming the payment. Keep it securely.

Side Note: After the payment of Advance Tax, it takes up to 10 days for it to reflect in Form 26AS.

Advance Tax Calculation

Time is money, and we at H&R Block, have designed a free Advance Tax Calculator for you, as we want to save your time, not just money. Use it for an accurate estimate of your advance tax liability in just a few minutes!

Interest on Late Payment

Under section 234B, if you default an advance tax payment instalment or pay less than the amount due, there will be an interest penalty levied.

Refund

As advance tax is paid on an estimation of annual taxable income, if you happen to pay more than what was required., you are eligible for a tax refund under section 245.

People Also Ask

Q. How to check advance tax payment status?

A. If you have paid advance tax, it will reflect in your form 26AS.

 

Q. Under Section 207, resident senior citizens are exempt from paying advance tax. Does this rule extend to Hindu Undivided Families (HUFs)?

A. No, this rule does not extend to Hindu Undivided Families (HUFs).

 

Q. I am turning 60 in this financial year. Am I eligible for advance tax exemption?

A. Yes, you are eligible for advance tax exemption for the year you turn 60 years of age.

 

Q. The bank is closed on the last day of payment. Will I be charged any penalty?

A. No. If the bank is closed on the last day of payment of an instalment, you can make the payment on the next working day, without getting penalized.

 

Q. I have missed the deadline of 15th March for the fourth installment. Can I still pay advance tax?

A. Yes, you can pay the remaining amount by 31st March. It will still be considered as advance tax.

 

Q. What is the difference between advance tax and self-assessment tax?

A. Based on your calculations after considering TDS and advance tax, if there is any balance tax to be paid for the income earned in the previous financial year, you must pay self-assessment tax in the assessment year.

 

Example: You paid advance tax for FY 2018-19 based on an estimation of your income. Before filing your income tax return, you realize that you have paid less tax than what was required. In this case, you are liable to pay the balance amount in AY 2019-20, called as “self-assessment tax”.

Conclusion

Advance Tax mechanism ensures a constant flow of income for the government to manage expenses incurred. Paying advance tax is one of your most important responsibilities and the onus is on you to promptly perform this duty.

How can H&R Block help you?

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CA Shreya Oturkar
Shreya is a tax advisor at H&R Block (India) with intensive experience in SME taxation and audit. She holds an advanced post graduate qualification in accounting and is highly skilled in financial analysis and reporting. Apart from her professional achievements, Shreya is a talented artist with a flair for free-hand sketching!

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