Let us see a step-by-step guide on how to pay income tax that is due.
Browse by Contents:
- Steps to Pay Income Tax Due
- How to File Your Returns After Payment?
- Advance Tax
- Self-Assessment Tax
- Outstanding Tax Demand Payment
Step 1: Select Challan 280
Go to the tax information network of the Income Tax Department and select Challan 280.
Step 2: Enter Personal Information
For individuals paying tax, select:
Select (0021) INCOME TAX (Other than Companies)
Choose the correct Assessment Year from the dropdown. We’re currently on AY 2018-19
Select (300) SELF ASSESSMENT TAX If you are paying taxes after the Financial Year has ended.
Fill in the rest of the details such as PAN, Address and bank name.
Note: Choose “(100) ADVANCE TAX” if you are paying taxes during the financial year. Choose “(400) TAX ON REGULAR ASSESSMENT” if you are paying tax in response to a demand notice from the Income Tax Department.
Step 3: Double check Information
You will be redirected to the Netbanking page. Double check the information entered here and enter the income tax amount to be paid in the income tax field.
Tip: You can leave surcharge, education cess, interest and penalty blank and put the entire amount in the Income Tax field wholly.
Step 4: Check Receipt (Challan 280)
Once the payment is done, you’ll get a tax receipt called Challan 280 on the next screen. Here, you’ll see details about your payment. The BSR code and challan serial number can usually be found on the bottom right.
Important: Save a copy of the tax receipt or take a screenshot. You’ll need to enter the BSR code and challan number to enter in your tax return.
How to File Your Returns After Payment?
Step 5: Report Payment Information
After you have made the tax payment, you need to report this information in your income tax return. Go to Taxes Paid Summary Page on ClearTax to update this information.
Select the “Self Tax Payments” tab and enter the BSR code and challan number from Challan 280.
Note: BSR code is a 7-digit number and challan serial number is of 5 digits.
Add ChallanMore info on income tax payment…
Income Tax Payment is Made for –
- Advance tax
- Self-assessment tax
- Outstanding tax demand payment
If you have annual tax dues of more than Rs 10,000, you must pay income tax in advance. Usually, for the salaried, these income tax payments are taken care of via TDS deductions by the employer.
Situations when you have to pay advance tax:
- You are salaried but have high income from interest or capital gains or rental income
- You are a freelancer
- You are running a business
How to Calculate and Pay Advance Tax?
Estimate your total income: Add income from all sources. Include salary income, interest income, capital gains etc., just like you would at the time of filing your income tax return. If you are a freelancer, estimate your annual income from all clients.
Freelancers have to subtract expenses: Freelancers are allowed to deduct expenses from their freelancing receipts. Rent of your workplace, internet bill, mobile bill, depreciation on computers, travel expenses etc. Read more information on freelancers and taxes.
Allow deductions: Reduce deductions you want to claim on your tax return. Deductions such as those allowed under section 80C, 80D, 80E or any other you want to claim. (Read more on Section 80C, 80CCC and 80CCD). Reduce deductions from your total income and arrive at your taxable income.
Calculate tax due on total income: Apply the latest income tax slab rates on your taxable income to calculate your income tax due. Reduce any TDS that may have been deducted from your total tax due. And make sure you have paid according to these installments. These payments of income tax can be made online.
Our CAs can calculate your advance tax liability and help you with paying it online.
Seeing a large tax outgo? Don’t worry, our CAs can help calculate your freelancing income and make sure your taxes are optimized.
Due Dates of Payment of Advance Tax for FY 2016-17
|On or before 15th June||Up to 15% tax|
|On or before 15th September||Up to 45% of tax|
|On or before 15th December||Up to 75% of tax|
|On or before 15th March||Up to 100% of tax|
Non-payment of advance tax can result in penal interest levy under section 234B and 234C.
Your income tax return cannot be submitted to the Income Tax Department unless you have paid tax dues in full. Sometimes, you may see tax payable at the time of filing your return. This tax which is called Self Assessment Tax, must be paid online, so that return is successfully e-filed afterward. Usually, interest under section 234B and 234C will also have to be paid along with your tax due, if you are paying tax after 31st March.
When you are e-filing with ClearTax, our system will automatically tell you how much tax you need to pay to file your return. You can also get your return verified from a CA and make sure your taxes are paid appropriately.
Outstanding Tax Demand Payment
Sometimes you may have to make an income tax payment to comply with an income tax demand notice. If you agree with the assessing officer and are ready to pay the demand, such income tax can also be paid online which is otherwise called tax on regular assessment.