Are you a first-time advance tax-payer? If yes then this article will help you know the term precisely. You will also learn the tricks of advance tax calculation. However, before dig into to the detail, we want you to be proverbial with the term ‘Advance Tax’.
Advance Tax is a part of income tax which is payable at the time the income is earned i.e. during the year rather paying at the end of the financial year. Those whose income tax liability is more than 10,000 in a financial year, he/she is eligible to pay Advance Tax. The best part of this tax is you can pay the tax on instalments. It is also famous as ‘Pay as you earn scheme’ which has to pay as per the due date mentioned by the Income Tax Department.
Are You Eligible:
Advance Tax is payable by only those who earn income from sources other than salary. Here, if a salaried person earns income from other sources than he has to pay this tax otherwise the salaried group is not included as they already pay tax or the employer deducts it. Senior Citizens without any business income are also exempted from paying the tax. However, we have categorised some sources, which attract advance tax:
· If an income received via capital gain
· Rent earned from a house property
· Interest that earned from FD accounts
· Winnings earned from lottery
Ways to Pay Advance Tax:
Below are the few easy steps to Pay Advance Tax without any Hassle -
· Pay it through tax payment challan at bank branches listed by the Income Tax
Department such as ICICI Bank, Reserve Bank of India, HDFC Bank, Syndicate
Bank, Allahabad Bank, State Bank of India and so on.
· You can also pay online through the Income Tax Department or National
Securities Depository (NSD) by following the below steps-
Go to the government website
1- You will see the option of the challan, Select the right challan option to pay the tax
2- Fill all the required details like address, phone number, assessment year, bank
name etc. And follow the further instructions
3- Once done with the details mention part, we will be redirected to bank’s Net-
banking page and you are required to rechecked the income to be paid here
4- Now you’ll get details of your payment you made with the challan number
5- Lastly and most important is you’ll have to report your payment after you’ve
made it through adding an additional entry under the paid tax page.
How to Calculate Advance Tax:
When you are paying Advance Tax, it is your utmost right to know how to calculate Advance Tax. Well, it’s sometimes better not to rush to your CA and do it by your own. Again, to avoid last minute hassle, knowing advance tax calculation is a saviour. So, we believe these easy steps will make the process more convenient to you. Here’s sneak peek into few steps of calculating the Advance Tax:
· Know the Income- Determine your income other than your salary is most important. You are liable to add the ongoing agreements that might pay out later.
· Exclude the Expenses- It is advisable to deduct your expenses from the income. These expenses include rent of the workplace, travel expense, internet and phone cost etc.
· Calculate Total Income- Add the additional income that you received from the sources like house rent, interest on FD accounts etc. Exclude the TDS deducted from your salaried account.
· Calculate the Slab- If your total tax due exceeds 10,000, then you are eligible to pay Advance Tax.
Being a responsible citizen, you’re liberate enough to make yourself up-to-date with any changes related to tax that influences your income. Paying the Advance Tax, you are not only up to your expectations and relax the stress level but also it helps in increasing the government funds.
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