Taxes are considered as the lifeblood of the government. Every nation throughout the globe used taxes as a way to raise funds for the sustenance of the economy and funds for the nation's building and development. Tax laws and tax rates vary every nation and it is the legal obligation of every person under the jurisdiction of the certain country. Taxpayers are primarily responsible to pay the required tax on the income earned during the year. There are ways in which taxes can be paid, and one of which is tax advance.
Advance Tax refers to the advance estimation of total taxable income thereafter pays the calculated tax amount payable by the assessee for the particular financial year. Advance tax is based on the principle of "Pay as you earn". Normally, the tax is paid when income is already earned. However, tax provisions allowed the estimation of the income for the entire year and payment is through installment with a specific time interval. Simply, the income tax is paid in equal parts throughout the year, rather than paying the lump sum tax amount at the end of the year.
Who are liable?
Advance taxes are compulsory for every income earner, other than his salary. It is also applicable on earnings from capital gains on shares, interest on fixed deposits, rentals, winnings from lottery or races, capital gains on house property besides his regular business or salaried income then after adjusting for expenses or losses he needs to pay advance tax. For employers, automatic deduction of tax from their employees' salaries is known as Tax Deducted at Source. Salaried employees should not worry about advance taxes. Individuals whose tax liability exceeds 10,000 in a certain financial year shall be required to pay advance tax.
For individuals to be excluded from paying tax advances, the following conditions must be present:
Based on the amended tax law, all taxpayers shall pay advance taxes on or before 15th of June, September, December, and March, in installments of 15%, 45%, 75% and 100%, respectively.
How to pay?
Advance taxes can be paid online, steps are the following:
Step 1: The list of the online banking facility that is registered for online income tax payment can be found on the next page of this document. If your bank is not listed, you cannot make online income tax payment through your bank account. Please note, the tax payments need not necessarily be paid by your bank account, it can be done by anyone else who has online banking facility without any change in the below-mentioned procedure.
Step 2: If the bank is listed, please visit http://www.tin-nsdl.com and login
Step 3: Go to services and select e-payment
Step 4: Click on CHALLAN NO/ITNS 280
Step 5: Taxes applicable would be 0021 (Income Tax Other Than Companies)
Step 6: Assessment Year is 2018-19
Step 7: Type of Payment is 100 (Advance Tax)
Step 8: Enter your PAN and rest of your personal details
Step 9: Press PROCEED button. The name corresponding to PAN you entered earlier will appear on the screen. If it is not your name, it would mean that you have entered incorrect PAN.
Step 10: If your name has appeared correctly, click the submit button.
Step 11: You would be directed to your bank's website. Log into your bank account. In the challan, enter the amount of tax next to the field income tax and make payment. You may enter the entire amount next to the field income tax. Complete the payment.
Step 12: Note the transaction ID.
Step 13: Save/print the received challan file.
Sanctions for Non-payment
A taxpayer will be penalized if advance taxes are underpaid throughout the certain
taxable year. However, if income was received during the year was uneven; you may avoid or lower the penalty by annualizing your income and making unequal payments.
Furthermore, penalties can also be waived if:
