How To Pay Income Tax Online

Today, you can calculate your tax liability in minutes using online tax calculators and pay it in just a few clicks via the official income tax website. The process is smooth and hassle-free, and you don’t need to be a finance whiz to pay your taxes.

Our easy step-by-step guide to paying current and past income tax dues online will help you take greater control of your accounts and finances.

Steps To Pay Income Tax Online Using Challan

Whether you are an individual or a company, you can pay your income tax anytime, anywhere in just a few clicks. Here’s a step-by-step guide to paying taxes online.

• Visit the official website of the Tax Information Network (TIN) of the Income Tax Department (http://www.tin-nsdl.com)

• Click on ‘Services’ on the menu at the top and choose ‘e-payment: Pay Taxes Online’ from the options that appear

• Select the challan that is relevant to your income category

  • ITNS 280: Corporation Tax (for companies) and Income Tax (other than Companies).

  • ITNS 281: TDS or TCS collected by companies and non-companies

  • ITNS 282: Hotel Receipts Tax, Gift Tax, Estate Duty, Expenditure Tax, Wealth Tax, Securities Transaction Tax and other miscellaneous direct taxes

  • ITNS 283: Tax on fringe benefits and cash transactions at banks

  • ITNS 284: Undisclosed foreign income and assets

  • Form 26 QB: TDS on sale of property

  • Type in the details of the PAN/TAN and other essential challan details like - accounting head under which payment is made - taxpayer’s address - the name of the bank via which you are making the payment

  • After you submit your details, the system will verify your PAN/TAN and show you a confirmation screen that shows your details as recorded with the IT authorities.

  • Confirm and continue. You will be taken to your bank’s payment gateway

  • Log in with your username and password into your net banking account

  • Authorise the payment

  • On successfully completing payment, you will receive a challan receipt, which will include the following details: - A unique Challan Identification Number (CIN) - Payment details - Bank’s name Save the receipt for reference and communication with the Income Tax department.

Instructions For Individuals To Pay Current And Past Income Tax Dues

The Income Tax Department has put in place an easy online process to pay pending income tax dues. This is hassle-free and quick.

For the benefit of the taxpayer, the Income Tax Department diligently sends out reminders/notifications to make sure taxes are paid on time or penalties do not keep piling up. Here is the simple step-by-step method to pay income tax dues online -

• Visit the official Income Tax Department site (http://www.tin-nsdl.com)

• Click on the ‘E-Payment’ section

• Select ‘Challan 280’ for paying your income tax dues

• Enter all your details: - As an individual, select 0021 (other than companies) - Enter your PAN details - Choose the relevant Assessment Year (AY) (if you are paying tax for income earned between April 1, 2019 and March 31, 2020, then your AY will be 2020–21) - Type in your complete address

• Select ‘Type of Payment’ correctly - If you are paying Advance Tax, select ‘(100) Advance Tax’ - If you are paying tax for the current or past years, select ‘(300) Self-Assessment Tax’ - If you have received a notice or reminder from the tax department for additional taxes, select ‘(400) Tax on Regular Assessment’

• Choose the bank through which you wish to make the payment

• Click on ‘Proceed’

• Login to your net banking account, enter the tax details, and authorise the payment

• Save the receipt that is generated on payment of your dues. This might be useful for reference later if the need arises.

Things To Consider While Paying Income Tax Dues

Income tax online payment may make have made life easier for the taxpayer, but one should be mindful of the following to avoid future stress:

• Permanent Account Number (PAN): Enter the correct PAN number or the tax may not get credited to your account

• Verification: Check and double check the completed form before submission

• Calculation: Make sure you have calculated your income tax accurately so that there is no shortfall or excess payment.

• Receipt: The confirmation of the tax payment generated as the challan receipt should be kept safe. The unique challan identification number (CIN) on it is vital for future correspondence with the Income Tax Department

How To Calculate Advance Tax

If you are liable to pay annual tax dues of over Rs 10,000, you must pay income tax in advance! If you earn salary income, this would probably have been taken care of by your employer through TDS. However, if you have income from other sources, you may still be liable to pay the tax. Freelancers, businessmen and individuals who earn via interest from deposits, property rentals, or capital gains are liable to pay advance tax.

Here’s how you can calculate advance tax:

• Determine the total annual income from all sources. If you are self-employed, make an estimate of your annual earnings
• If you are self-employed, deduct business expenses from this income – for example, office rent, travel expenses, internet and mobile bills, etc.
• Subtract deductions and exemptions available to you to arrive at your taxable income
• Check your income tax slab to calculate the income tax amount due.
• Subtract any TDS from the total tax amount due That’s your total tax payable for the year.

If this exceeds Rs 10,000, then you must pay advance tax according to the following schedule:

On or before June 15, you must pay 15% of the total tax payable

On or before September 15, you must pay 45% of the total tax payable

On or before December 15, you must pay 75% of the total tax payable

On or before March 15, you must pay 100%

Let’s illustrate this with a simple example.

Assume you have a taxable income of Rs 10 lakh. Your total tax liability on this may be Rs 1,17,000 (including cess). Here’s how you would have to pay advance tax:

• Advance tax payable up to June 15: Rs 17,550
• Advance tax payable up to September 15: Rs 52,650
• Advance tax payable up to December 15: Rs 87,750
• Advance tax payable up to March 15: Rs 1,17,000

If you delay in paying advance tax, you are liable to pay interest of 1% per month. So, pay your tax on time to avoid penalties.

Given the disruptions caused by COVID-19, the government has offered some relief to taxpayers. The first quarter of advance tax is normally due on 15 June, and any delay is subject to penal interest of 1% per month. As a relief measure, the government has lowered the interest rate to 0.75%, provided the tax is paid by 30 June 2020.