An individual may, based on his income, decide to deposit tax in advance or tax after the completion of the year. This activity requires a few calculations after which tax has to be deposited. There are 2 ways of depositing tax — online and offline. The online process is quick and easy whereas the offline process involves standing in long queues. An individual can deposit tax in the form of advance tax. Advance tax has to be paid in 4 installments. The due dates for payment of this tax are 15th June, 15th September, 15th December and 15th March. One is required to calculate total tax on estimated income and pay advance tax in instalments of 15%, 45%, 60% and 100% on every due date.
For example Mr Arya has estimated that his income for Financial Year 2016-17 is Rs 10,00,000. A TDS of Rs 50,000 has been deducted. Mr Arya wants to pay advance tax to make sure that no interest has to be paid on tax due while filing his income tax return.
Here is how advance tax to be paid by Mr Arya will be calculated –
Sometimes while filing the income tax return, one may notice that the tax payable is more than the taxes already paid in the form of TDS, Advance Tax, etc.
This tax can also be deposited online by an individual.
Here are the steps for depositing tax online:
Step 1: Go to the tax information network of the Income Tax Department and select Challan 280.
Step 2: Enter your personal information. Make sure you choose the Assessment Year correctly.
Step 3: You will be redirected to the net banking page. Double check the information entered here and enter the income tax amount to be paid in the income tax field.
Step 4: Once you make the payment you will get Challan 280. You will be able to see details about your payment on taxpayer’s counterfoil and BSR code and challan number on the right.
All the challans for payment of Advance Tax and Self Assessment Tax have to be mentioned while filing income tax return. If one does not mention the tax payment challans while filing a return, the department will process the return and raise a demand. Hence an individual should make sure that all the challans with correct BSR code and Challan number should be entered in the income tax return. Also, if there is a demand raised by the income tax department after processing the return and you agree with the demand, the same can also be paid online.
Thus, depositing tax online is a simple and easy way to pay taxes.
(The author is Founder & CEO of ClearTax.com)