How to make Advance Tax Payments online

What is advance tax?

Advance tax refers to the system of paying tax in instalments during the financial year instead of paying a lump sum at the end. It is also known as ‘pay-as-you-earn’ tax. This system ensures that taxpayers discharge their tax liability as they earn income rather than waiting for the end of the year.

It applies to income that is not subject to tax deduction at source (TDS), such as income from business, rent, capital gains, or interest. Individuals, freelancers, and companies are required to estimate their total taxable income and pay advance tax accordingly. This system improves government cash flow and promotes better compliance. It is governed by the Income Tax Act, and failure to pay on time may result in penalties and interest under relevant sections.

Who is liable to pay advance tax?

Advance tax is payable by all individuals, self-employed professionals, companies, and firms whose total tax liability in a financial year exceeds Rs.10,000. This includes salaried individuals with additional income from rent, interest, capital gains, or business.

Senior citizens aged 60 or above who do not have income from business or profession are exempted from paying advance tax. Freelancers, business owners, and professionals are particularly required to assess their annual income in advance and deposit tax quarterly. Even non-residents earning taxable income in India are liable if their income crosses the threshold. Advance tax is applicable across all types of taxpayers, provided the projected tax payable is more than the prescribed limit.

Due dates to pay advance tax

Advance tax must be paid in four instalments during the financial year, according to the schedule defined by the Income Tax Department. For individuals and non-corporate assessees, the due dates are 15th June (15% of tax), 15th September (45% cumulative), 15th December (75% cumulative), and 15th March (100% of total tax).

For companies, the same dates and percentages apply. Failure to adhere to these deadlines may attract interest under sections 234B and 234C. However, taxpayers opting for presumptive taxation under section 44AD or 44ADA must pay the entire tax amount by 15th March. Timely payment avoids penalties and ensures compliance with tax regulations.

How to calculate advance tax?

To calculate advance tax, start by estimating your total income for the financial year from all sources, including salary, business, capital gains, rental income, and interest. Deduct eligible exemptions and deductions to arrive at the taxable income.

Next, compute the tax liability as per the applicable slab rates for individuals or the flat rate for companies. Deduct TDS and any other tax credits already available. If the resultant tax payable exceeds Rs.10,000, advance tax needs to be paid. This total tax should then be split as per the quarterly due dates. Using tax calculators provided by the Income Tax portal or consulting a professional can help in accurate estimation.

Benefits of paying advance tax

Paying advance tax offers several benefits. It reduces the burden of paying a large tax amount at the end of the financial year, making tax payments more manageable. It also helps avoid interest penalties under sections 234B and 234C for non-payment or underpayment.

For businesses and self-employed individuals, it promotes financial discipline and better cash flow management. The government also benefits, as it improves revenue collection throughout the year, allowing smoother budgetary allocations. Additionally, timely payment of advance tax leads to quicker refunds, if applicable. It ensures compliance and reduces scrutiny or notices from the Income Tax Department.

What are the consequences of non-payment/short-payment/delay in payment of advance tax?

Failure to pay advance tax or underpayment can lead to financial penalties. Under section 234B, if 90% of the total tax is not paid before the financial year ends, interest is charged at 1% per month on the shortfall. Section 234C imposes interest for delay or shortfall in quarterly payments.

These interests are mandatory and cannot be waived. Additionally, delayed or missed advance tax can disrupt personal or business financial planning, leading to cash flow issues during final tax filing. It also increases scrutiny from the Income Tax Department and may result in notices, reassessments, or additional compliance checks.

What are the methods for advance tax payment?

Advance tax can be paid through both online and offline modes. Offline payment involves visiting an authorised bank branch and depositing the amount using Challan 280. The taxpayer must fill out the challan with accurate details like PAN, assessment year, and tax type.

Online payment is more convenient and is done via the Income Tax Department’s e-payment portal through net banking or debit cards. Taxpayers can also access this via the NSDL website or bank websites integrated with the department. For businesses and individuals with regular obligations, online payment ensures immediate acknowledgment and error-free documentation for future reference.

Steps for online payment of advance tax

To pay advance tax online, visit the Income Tax Department’s e-filing portal and navigate to the 'e-Pay Tax' section. Select the relevant assessment year, tax type (advance tax), and complete the details required in Challan 280.

After confirming your PAN and other credentials, choose your bank for net banking or debit card payment. Verify the details and proceed to payment. Once the transaction is successful, a challan receipt is generated with a BSR code and CIN. This receipt should be saved for future reference or verification. The process is quick, secure, and can be completed from anywhere at any time.

Conclusion

Advance tax is a crucial aspect of India’s tax system, helping individuals and businesses distribute their tax liability across the financial year. It promotes timely compliance, reduces end-of-year burdens, and aids government cash flow.

Understanding due dates, calculation methods, and payment options ensures smooth tax management. Delays or underpayments can attract penalties, making it essential to estimate income accurately and pay on time. With both online and offline methods available, advance tax compliance is convenient and efficient. Whether you are a salaried individual with extra income or a business owner, timely advance tax payment ensures you stay tax-compliant and financially prepared.