How To Plan Your Advance Tax

How To Plan Your Advance Tax

Finding it difficult to keep up with your tax payments? Well, to make it simpler, there is the advance tax system in place where certain taxpayers can make their payments in installments. Now, if you’re wondering how to go about paying taxes through this method, you have come to the right place. This article will tell you everything you need to know about paying advance tax, which will help you plan your payments better.


What is Advance Tax?


Advance tax refers to paying part of the tax in advance before the end of the financial year. Here, the tax payments are made in installments, as per the due dates provided by the Income Tax Department, instead of the usual lump sum paid at the year (financial year) end. An essential point to be noted is that advance tax is payable when the tax liability is greater than Rs. 10,000 during a financial year. Also, it needs to be paid in the year in which the income is received. Advance tax is also referred to as the ‘pay-as-you-earn’ scheme.  


Who should file it?


If you are a salaried employee and your sole income is salary, you do not have to pay advance tax since your employer will deduct it at source, known as TDS. Advance tax only becomes applicable when a person has sources of income besides his or her salary. Say, for instance, if an individual earns through interest on fixed deposits, capital gains on shares, winnings from lottery or races and capital gains on house property, then he or she will have to pay advance tax on all income after making the necessary adjustments for expenses or losses.


Advance tax is payable on income that is not subject to TDS. Professionals (self-employed) and businessmen will have to pay advance tax as, given that they make business income, their tax liability can be a considerable sum.


Due dates for payment of Advance Tax 2018-19


Due Date

Advance Tax Payable

On or before 15th June

15% of advance tax

On or before 15th September

45% of advance tax

On or before 15th December

75% of advance tax

On or before 15th March

100% of advance tax


How to pay Advance Tax?

Follow these steps to make online payment of Advance Tax:

Step 1: Check whether the bank with which you have an online banking facility is registered for online income tax payment.


Step 2: If your bank is listed, visit the TIN website of the Income Tax Department and login with your credentials.

Step 3: Go to services and select e-payment. Click on CHALLAN NO/ITNS 280

Step 4: Select 0021 (Income Tax Other Than Companies)

Step 5: Choose Assessment Year as 2019-20 and Type of Payment as 100 (Advance Tax)

Step 6: Mention your PAN and rest of your personal details

Step 7: Click on the Proceed button. The name corresponding to PAN you entered earlier will show up on the screen.


Step 8: If your name is correctly mentioned, click on the submit button.

Step 9: You would be taken to your bank’s website. Log in to your bank account, and in the challan, enter the tax amount and make payment.


Step 10: Note the transaction ID.

Step 11: Save/print the received challan file


Names of banks registered for receiving income tax payment


Allahabad Bank
Andhra Bank
Axis Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
Indian Bank
Indian Overseas Bank
Jammu & Kashmir Bank
Oriental Bank of Commerce
Punjab and Sind Bank
Punjab National Bank
State Bank of India
Syndicate Bank
UCO Bank
Union Bank of India
United Bank of India
Vijaya Bank


Points to take note of:


  • In the event you miss making payment by the first deadline, you will have to incur a certain interest. Interest is calculated at the rate of 1% of the total amount due each month, beginning from the deadline until the time the payment is made. Penalty and interest applicable for non-payment or deferred payment of advance tax falls under Section 234B of Income Tax Act and Section 234C of Income Tax Act, 1961.


  • Advance tax payments are exempted in the following cases:
  • For senior citizens (individuals above 60 years of age) who do not own a business.
  • An individual whose total income tax liability (in addition to the TDS) for the year is below Rs. 10,000.


Now that you know everything there is to Advance Tax, make sure to pay your dues on time. Set a reminder a few days before the due date, so you don’t miss making the payment and incurring any interest payment.


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