Advance Tax Payment: Everything you Wanted to Know!

Learn whether you are eligible to make advance tax payments. If you are eligible, learn how to calculate it, the procedure, due dates, etc.

Advance Tax Payment

Advance Tax Payment: Everything you Wanted to Know!

Do you have income sources that are other than your salary? If yes, you should learn about the following:

  1. What is advance tax payment?
  2. Advance tax instalment
  3. What are advance tax due dates?
  4. Advanced tax calculator details
  5. Advance tax payment procedure

So, without any further ado, let’s explore.

Advance Tax Payment: What is it?

Advance tax is also called the "Pay as you earn" scheme. If you have income sources other than salary, you can pay advance tax. Some of the other income sources can be:

  • Capital gains made from share trading or investing
  • Rent
  • Lottery winnings
  • Interest earned from fixed deposits, and others

In a financial year, you can pay this tax if:

  • Your tax liability is more than Rs. 10,000
  • You have income sources other than salary

While paying an advance tax, you should remember that this tax needs to be paid during the same year you have received it.

Advance Tax: How to Calculate?

You can calculate advance tax payment in the following five easy steps:

Step #1: Estimate your Income from Sources other than Salary in a Financial Year

To calculate your total income in a financial year, you have to take into account the income you've earned from the following sources:

  • Capital gains from stock trading/investing
  • Income from your profession (say, freelance work)
  • Income from renting your house or apartment
  • Interest income from the savings account, fixed deposits, and others
  • Any income source other than salary

Step #2: Calculate your Gross Taxable Income

You should now calculate your gross taxable income in a financial year by adding your salary to the income from sources other than your salary.

Step #3: Calculate Payable Tax Amount as per TDS Slab

When you get the gross taxable income amount, you have to check the tax slab to know which tax slab is applicable for taxation.

Step #4: TDS Deduction

Once you know the tax slab at which you’ve to pay taxes, you have to deduct the TDS that has either been deducted already or will get deducted.

Step #5: Advance Tax Amount to Pay

You can pay advance tax if your liability of tax payment exceeds Rs. 10,000 after the TDS is either deducted or paid by you.

Advance Tax Payment Procedure: How to Pay?

You can make payments for advanced tax either through a bank or online. There are multiple banks that the income tax department has authorised for collecting advance tax payments. You can make this tax payment through tax payment challans (Challan 280) from the branches of any of the following banks:

  • State Bank of India
  • ICICI Bank
  • Allahabad Bank
  • HDFC Bank
  • Syndicate Bank and others

You can also make advance tax payments by visiting the Reserve Bank of India’s (Apex bank of India) office.

You can also make this payment online either through:

  • National Securities Depository or
  • Income Tax department’s tax payment site

Due Dates of Advance Tax Payment

The due dates to make advance tax payments are:

  • You can pay 15% of your advance tax on June 15 or before this date of the same financial year in which you received the payment
  • You can pay 45% of your advance tax on September 15 or before this date of the same financial year in which you received the payment
  • You can pay 75% of your advance tax on December 15 or before this date of the same financial year in which you received the payment
  • You can pay 100% of your advance tax on March 15 or before this date of the same financial year in which you received the payment 

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