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Advance tax payment and how does it work?

Advance tax payment and how does it work?

Advance tax payment and how does it work?

Advance tax is a type of tax payment that is made in instalments based on the projected income for the year rather than paying the entire tax bill at the end of the year. Anyone with an expected tax burden of $10,000 or more for the year is required to pay advance tax. It’s paid in monthly instalments.

What is the significance of advance tax?

Advance tax is a type of income tax that is paid in advance for income produced during a given fiscal year. Normally, the tax is due when the income is received. Even yet, under advance tax regulations, the payer must estimate his or her income for the entire year. And the tax is paid at particular intervals depending on this estimate. It is critical that the tax payer assesses his or her income and then calculates the predicted tax on it to see if and how much advance tax is due.

In advance tax, which forms are required?

Challan No. ITNS 280 is the form that must be properly filed by the deadlines. Challan No. ITNS 280 has the following prerequisites:

  • PAN Specifications: If you don’t publish your PAN correctly, your tax will be deposited in someone else’s name.
  • Year of evaluation: Because the tax is being paid in advance for the following fiscal year, make sure you select the correct assessment year.
  • Choosing a payment method: In the form, the taxpayer must select the type of payment. It is advance tax if the tax is paid for the same fiscal year based on the projected revenue. It is self-assessment if the tax is paid after the end of the financial year.

A Challan Identification Number (CIN) will be supplied after the payment has been made. You must keep a record of this information and utilise this CIN when completing your income tax return. Also, double-check whether the IT department has received the ITNS 280 online payment.

Who is exempt from paying Advance Tax under the Income Tax Act of 1961?

If the following criteria are met, you will be considered a Senior Citizen:

  • If the person is a one-of-a-kind;
  • Is an Indian resident as defined by the Income Tax Act of 1961;
  • At any point during the year, you are 60 years old or older;
  • Has no revenue that is taxable under the heading “Business or Profession.”

An individual with exclusively salaried income, because the employer deducts and pays the tax in the form of TDS (Tax Deducted at Source).

How does it work?

1. Estimated total income calculation?

Particular(Estimated) Amount
Income under the head “Salaries

Income under the head “Income from House Property”


Income under the head “Income from Business or Profession
Income under the head “Capital Gains”
Income under the head “Income from Other Sources”
Gross Total Income
Less: Deductions under section 80C to 80U
Net Total Income

2. Estimate the advance tax on the above-mentioned net total revenue.

Particular(Estimated) Amount
Tax calculated on Net Total Income at applicable rates

Less: Rebate under section 87A

Balance Tax


Add: Surcharge (if applicable)

Total tax after surcharge               –
Add: Health & Education Cess @ 4%                –
Total tax                –
Less: Relief under section 89, 90, 90A or 91               –
Less: TDS, TCS, MAT, AMT already paid             –
Total Advance Tax Liability             –


3. Pay the tax on the due dates indicated for this purpose if the total Advance tax debt determined as above is Rs. 10,000 or more:

Taxpayer Types Due dates      
By 15th June


15th Sept


15th Dec


15th March

Everyone who pays taxes (other than those who opted for Presumptive taxation scheme under Section 44AD or 44ADA) Minimum 15% of Advance Tax Minimum 45% of Advance Tax Minimum 75% of Advance Tax 100% of Advance Tax
Taxpayers who chose the Section 44AD or 44ADA Presumptive Taxation Scheme NIL NIL NIL NIL


  1. A corporate taxpayer (i.e., a company) and a taxpayer (other than a company) whose accounts must be audited must pay Advance tax electronically through an authorised bank’s internet banking facility.

Any other taxpayer can pay advance tax in any way he or she wants (either physical mode or electronic mode). Tax is paid in the physical form by depositing the challan at the bank.


  • Advance tax might be paid on one’s own account or on the Assessing Officer’s order.
  • There is no necessity to submit an estimate or income statement to the income tax authorities when a taxpayer computes expected income and pays advance tax on it.
  • After paying any of the instalments, if a taxpayer revises the estimated income and tax on it due to some estimated addition or deletion, the remaining future instalments can be amended and paid correspondingly, without having to submit a revised income estimation to the income tax authorities.
  • When a taxpayer is compelled to pay advance tax in response to an Assessing Officer’s order, the tax can be paid in full or in part in instalments due after the order’s date.
  • Tax paid until the 31st of March in the current fiscal year is considered an advance tax.
  • If the last day to pay advance tax falls on a weekend or holiday, it can be paid the next day without incurring any interest costs.
  • If an Assessing Officer issues an order, it must be issued before the 1st of March of the current fiscal year.
  • In the event that the taxpayer’s advance tax liability exceeds the assessing officer’s, the taxpayer should pay the tax according to his or her own calculations without notifying the officer.
  1. By accessing or following the link on the Income Tax website, you can pay Advance Tax either electronically or physically using Challan no./ITNS 280. Note that the taxpayer’s PAN is required on the Challan, and mentioning the incorrect PAN may result in a Rs.10,000 penalty.
  2. Within 3-4 working days of completing the payment, the tax will be recorded on the taxpayer’s Form 26AS. Confirmation of details can be found on Form 26AS.

What is Form 28A and when do you need it?

Form 28A is an intimation that the taxpayer must provide to the Assessing Officer if the officer’s estimated income is higher than the taxpayer’s estimated income. The taxpayer fills up this form with the specifics of the estimated reduced income and tax, as well as the reasons for the discrepancy.

It must be signed by the person who is authorised to sign the income tax return.

In the case of advance tax payment, who is an assessee in default?

  • A taxpayer-funded
  • Who does not pay any advance tax by the due date OR who pays advance tax but less than 90% of the assessed tax

In the case of the above assessees who are in arrears, interest is charged under section 234B of the Income Tax Act, 1961—

Rate: 1% each month, or a portion of a month.

Period: From the first day of the Assessment year to the date of income determination or regular assessment by the Income-tax authorities in accordance with the Income-tax rules.

Amount due for interest is calculated as follows: Assessed tax minus Advance tax paid (if any) = Amount of unpaid or underpaid advance tax on which interest is charged.

[Assessed tax entails…]

Income tax authorities determine the amount of tax to be paid.

TDS/ TCS/ MAT/ AMT/ Relief u/s 89/ 90/ 90A/ 91] TDS/ TCS/ MAT/ AMT/ Relief u/s 89/ 90/ 90A/ 91]

In the instance of late payment of advance tax instalments, interest is charged under section 234C of the Income Tax Act of 1961—

Interest will be charged to taxpayers (other than those who choose the presumptive taxation plan under section 44AD or section 44ADA)

  1. if the advance tax paid on or before June 15th is less than 12 percent of the advance tax payable.
  2. If the advance tax paid on or before the 15th of September is less than 36% of the advance tax due
  3. if the advance tax paid on or before the 15th of December is less than 75% of the advance tax due.
  4. if the advance tax paid on or before the 15th of March is less than 100% of the advance tax due.

Interest will be charged to taxpayers who chose the presumptive taxation scheme under Section 44AD or Section 44ADA.

  1. If the amount of advance tax paid on or before March 15th is less than the whole amount of advance tax due.

Rate: 1% each month, or a portion of a month.

Period: Three months if payment of the first, second, and third instalments is late, and one month if payment of the last instalment is late.

Interest-bearing amount: The amount of the instalment was not paid in full.


Therefore, if you have issues regarding how to manage your Income Tax 1-7, consulting a business attorney or using an online legal firm for advice and guidance may be beneficial. We, at IndiaFilings, provide this service at a reasonable cost and with excellent customer care. So please contact us and we will gladly assist you.