How to Pay Income Tax Online: 4 Advantages of Income Tax E Payment
Paying your income taxes on time is mandatory. Thankfully, now you can pay your income tax online. It is convenient, less time consuming and can be filed from the comfort of your home or office. Read on to know how to make an Income tax payment online, what are the documents required, and the advantages.
What is E Income Tax Payment?
The Income Tax Department launched the facility of e payment of income tax to enable taxpayers to pay their taxes in a hassle-free way.
It is mandatory for companies and non-corporate taxpayers who are liable to get an audit done as per Section 44AB of ITA to pay taxes via the e-payment mode only.
Taxpayers who do not fall under either companies or non-corporate taxpayers have the option of paying taxes physically. This can be done by submitting the hard copy of the challan along with the requisite amount at any authorized bank.
However, it is advisable for every taxpayer to avail of the online mode while paying taxes as it saves time.
How To Pay Income Tax Online?
If you want to make an income tax online payment, simply follow the steps mentioned below:
- Step 1
You need to visit the official Tin-NSDL website. The Tax Information Network (Tin) is the government portal for all things related to your taxes.
- Step 2
On the homepage of the Tin-NSDL site, click on the ‘e-payment: Pay Taxes Online’ option. This should redirect you to a different page.
- Step 3
Next, look for the ‘Non-TDS/TCS’ section, where you will find ‘Challan No./ITNS 280.’ Under it, click on ‘Proceed’ to go through to the next step.
- Step 4
On the following page, taxpayers have to choose from two options. If you are a business filing its yearly taxes, select ‘(0020) Corporation Tax.’ Otherwise, pick ‘(0021) Income Tax (Other than Companies).’
- Step 5
After choosing your applicable option, provide all the necessary details.
- Step 6
Next comes choosing your preferred mode of payment. Presently, this portal allows taxpayers to complete income tax payments online using a debit/credit card or net banking.
- Step 7
Complete CAPTCHA verification and proceed. The following page will display all your entered information. Check for inaccuracies and click on ‘Submit to Bank.’
- Step 8
Once the income tax online payment is complete, make sure to collect the income tax payment challan online. This challan includes crucial information, such as challan date, BSR number and the amount of tax you have borne.
That concludes the income tax payment online through NSDL. However, before proceeding with this e income tax payment, check whether you are eligible for the same.
Also Read – Income Tax Rebate Under Section 87A: Eligibility & Claim Process
What is Meant by Self Assessment Tax?
A taxpayer needs to pay self-assessment tax before filing ITR. It is the balance tax which assesses need to pay on their assessed income.
Assessees can get the amount payable as a self-assessment tax after deducting advance tax and TDS from their total tax liability.
The employer of a salaried individual pays the self-assessment tax on the employee’s behalf. Individuals who are liable to pay self-assessment tax will not be able to file their ITR before making payment.
How is Self Assessment Tax Calculated?
Given below is the formula for calculating self assessment tax:
[(B+C) – (D+E+F+G)]
Here,
B = Total amount of payable tax
C = Payable interest u/s 234A/234B/234C
D = Relief on payable tax u/s 90/90A/91
E = MAT credit u/s 115JAA
F = Amount of TDS/TCS
G = Advance tax
One should note that interest under section 234A will be added only for late filing of income tax returns. Similarly, interest under section 234B/234C will be taken into consideration for late payment of advance tax.
E Income Tax Payment: Eligibility Criteria
The following are the eligibility criteria for online payment of income tax:
- Resident Indians aged between 18 and 60 should possess an annual income of Rs.2.5 lakh or more.
- Senior citizens (aged between 60 and 80 years) can pay taxes online if their annual income is more than Rs. 3 lakh. Super senior citizens (aged over 80 years) are eligible to pay taxes using the Tin-NSDL portal only when they have a yearly income of more than Rs. 5 lakh.
- Any resident holding property or financial claim in an entity is also eligible for advance income tax payment online. Similarly, if you hold an account outside of India, you are eligible to pay taxes on it as well.
- All companies operating on Indian soil can use this online facility too.
- An assessee filing returns under Section 139 (4B) (ITR 7) is eligible.
- If you own a firm under Section 44AB guidelines, you can clear taxes using online payment.
- AOP, BOI, co-operative societies, local authorities and juridical persons are other parties who can utilize this online portal to pay their taxes.
- Lastly, those who are claiming tax relief under Sections 90A, 90 and deductions under Section 91 can also pay income tax online.
Also Read: Professional Tax In India- Tax Slab Rates And Applicability
How Does the Income Tax E Payment Process Work?
Before jumping into how to pay taxes online, you must learn about the different components at work when it comes to the collection of income tax. Here are some crucial elements in this process –
OLTAS
Online Tax Accounting System or OLTAS is the Indian Government’s database, maintaining a record of taxes collected. It is essential to manage such collections and keep track of taxes deposited.
PAN
Permanent Account Number or PAN refers to a 10-digit alphanumeric code that is assigned to Indian taxpayers. Without a PAN card, income tax payment online or offline is virtually impossible.
TAN
Another 10-digit alphanumeric code unique to each taxpayer, the Tax Deduction/Collection Account Number is mandatory if you deduct taxes at source or if you collect taxes at source. TAN is a crucial part of online income tax payments.
What is Advance Tax Payment?
A taxpayer needs to pay income tax if the total tax liability exceeds Rs. 10,000 in a financial year. He/she has to pay it in the year he/she receives the income.
Basically, advance tax is the advance payment of income tax instead of the payment of a lump sum at the end of the year. The taxpayer needs to pay the amount in instalments within the due date specified by the Income Tax Department.
Advance tax is also known as the ‘pay as you earn tax.’
Advantages Associated with Income Tax Payment Online
Now that you are aware of the e income tax payment process, here’s a look at why clearing your taxes online is beneficial:
- Pay from anywhere and at any time
Taxpayers can utilize the portal for clearing their liabilities at any time they please. The facility is available 24×7.
- Increased convenience
Online tax payment is immediate. Therefore, even if you decide to file your returns at the last moment, you can do so without missing the deadline.
- Real-time status check
You can check whether your tax payment reached the concerned department or not.
Acknowledgement is available in the form of a digital challan.
- Pay on behalf of your business
If you own a business, you can use this online portal to clear your company’s annual tax liabilities as well.
Due Dates for Income Tax Online Payment
The table given below provides the income tax filing dates for the assessment years 2022-2023:
| Taxpayer | Due Date for filing ITR |
| Individual/HUF/AOP/BOI | July 31 2022 |
| Businesses (that require Audit) | October 31 2022 |
| Businesses (that require TP Report) | November 30, 2022 |
The tax calendar for the assessment year 2022-2023 is given below:
| Due Date | Tax |
| June 15 2022 | Payment of first instalment of advance tax |
| July 15 2022 | ITR filing date for entities who haven’t done any international or specified domestic transaction and who are not liable for a tax audit |
| September 15 2022 | Payment of second instalment of advance tax |
| September 30 2022 | Date of submission of the audit report for entities liable for a tax audit under ITA |
| October 31 2022 | Date of filing ITRs for entities requiring audit (those who haven’t engaged in any international or specified domestic transaction) |
| October 31 2022 | Date of submission of tax audit reports for entities who have engaged in transfer pricing and specified domestic transactions |
| November 30 2022 | Date of filing ITRs for taxpaying entities requiring an audit |
| December 15 2022 | Payment of third instalment of advance tax |
| December 31 2022 | Last date on which one can file a belated return or a revised return |
| March 15, 2023 | i) Payment of fourth instalment of advance tax ii) Date of submission of the entire amount of advance tax by taxpaying entities covered u/s 44AD and 44ADA |
Things to Remember While Making Income Tax Payment Online
Given below are the points that one should remember while paying income tax online:
- Correct assessment year
Often, taxpayers confuse the assessment year with the financial year and make a mistake. They need to keep in mind that applicable taxes for the income earned in the previous year are paid in the immediately succeeding year which is called the assessment year.
- Correct tax code
Taxpayers have the tendency to make a mistake in choosing the wrong code under ‘tax applicable’ and ‘type of payment’. Assessees should remember that correct details of tax payments will not be shown in their account if incorrect codes have been inserted.
- PAN
One needs to enter the correct Permanent Account Number.
- Calculation
The details of the amounts provided should be rechecked to avoid inaccuracy and miscalculation.
- Verification
After taxpayers have filled out their income tax return form, they should go through it once to check for discrepancies, if any.
- Receipt
One should keep the receipt/acknowledgement generated safely as it will be useful in case one has to communicate with the Income Tax Department in the future.
Important Documents for Income Tax Payment Online
Assessees will require the following documents to pay taxes online:
- Bank statement and salary slips
- Form 16
- Form 26AS
- Form 16A, 16B or 16C
- PAN card
- Aadhaar card
- Deductions claimed under Section 80C all the way through Section 80U
- Capital gains from mutual fund investments or property sale
- Proof of investment in tax-saving instruments
- Interest certificates from your post office or banks
- Statement of home loan from your chosen financial lender
Also Read: Deductions Under Section 80C Of Income Tax: Eligible Investments And Expenses
How to Pay Income Tax Offline?
Given below are the steps for paying income tax offline:
Step 1: You need to visit an authorized bank and ask for Challan 280. The challan is also available on the official website of the Income Tax Department.
Step 2: You need to fill-up the form accurately and submit it.
Step 3: Next, the bank will issue a counterfoil which serves as the proof of payment. Before you leave the bank, check whether the counterfoil has the following details-
- Date of deposit of the challan
- Serial number of the challan
- 7-digit BSR code of the bank branch
What is the ITR Filing Process after Income Tax Payment?
It is important for the taxpayer to accurately calculate tax liability otherwise he/she might just end up paying more than the requisite amount.
Given below are the steps to calculate tax liability:
Step 1: You need to calculate your gross income. Sources of income include salary, income from business/profession, house property, capital gains, and other sources like interest earned from the savings bank account and deposit schemes.
Step 2: You need to calculate your net taxable income because there are certain investments and savings schemes that allow tax deductions/exemptions.
Step 3: After subtracting eligible deductions from the gross taxable income, you will earn the net taxable income. You need to check under which income tax slab the net taxable amount falls. This is because the tax payable will be based on the relevant income tax slab rate.
Step 4: If your taxable income is equal to or more than Rs. 5 lakh per annum you need to calculate the health and education cess of 4% on your tax to arrive at the final payable amount. Please note that if you are a high-income earner, you will need to pay the applicable surcharge as well. After making these calculations, you will get your net tax liability.
Step 5: Deduct prepaid taxes like TDS, TCS and advance tax. The tax payable that you will arrive at after making the deductions need to be rounded off and paid as self-assessment tax before the submission of the Income Tax Return (ITR).
Given below are the steps to file an income tax return:
Step 1: First you need to calculate your income, deductions and tax payable. Please note that you need to take into account payments of advance tax, TDS and TCS
Step 2: You need to provide a summary of the TDS amount from the TDS certificates of all the quarters in a financial year.
Step 3: Select the correct ITR form that is applicable for filing your income tax return
Step 4: Visit the official portal of the Income Tax Department and download the ITR utility form.
Step 5: Fill up the necessary details accurately.
Step 6: Next, you need to validate the information entered by clicking on the ‘validate’ button on the file
Step 7: Next, you need to convert the file to XML format
Step 8: Log in to your account on the income tax portal. Navigate the cursor to the ‘e-file’ tab and click on ‘Income Tax Return’. Insert the necessary information like assessment year, PAN, ITR form number and mode of submission. Then upload the file from your computer and attach it. Finally, click on the submit button
Authorized Financial Institutions for Income Tax Online Payment
Here is a list of all the financial institutions that are authorized for online tax payment:
The advent of income tax payments online has reduced the overall hassle of clearing taxes. Besides the convenience, payment through this portal is fast and reliable. Moreover, with roughly 1.46 crore Indians paying taxes yearly, this online procedure simplifies tracking and management for the Income Tax Department.
Final Word
The advent of income tax payments online has reduced the overall hassle of clearing taxes. Besides the convenience, payment through this portal is fast and reliable. Moreover, with roughly 1.46 crore Indians paying taxes yearly, this online procedure simplifies tracking and management for the Income Tax Department.
FAQs on Income Tax Payment Online
Ans: No, taxpayers can also choose to pay their income taxes using an offline method. For this, they need to visit their nearest bank branch and fill up Challan form 280. After filling up this form, they have to submit it alongside the applicable tax amount at the bank.
Ans: All information related to taxes that you pay is available in Form 26AS. This form acts as an annual tax statement for individuals and companies. To view this, simply visit the IT Department’s e-filing website.
Ans: Not all banks are authorized to handle tax transactions. If your bank is one such institution, you can choose to clear payment from another individual’s bank account. However, make sure that the PAN associated with such payment is yours.
Ans: Usually, challan status is visible to taxpayers in the ‘Challan Status Inquiry’ section. However, it can take between 5-7 days to reflect any changes in your tax payment status. If no such change is visible even after payment, taxpayers should contact their authorized bank.
Ans: Scheduling tax payment is possible using a net banking facility. You can choose the date while entering your net banking details. However, no such option is available when clearing your taxes using a credit or debit card.
Ans: Given below are the steps to check the status of income tax payment:
Step 1: Visit the homepage of the official e-portal of the Income Tax Department and choose ‘Know Payment Status’
Step 2: You will be redirected to a page where you need to enter PAN, TAN, CRN and mobile number; then, click on the continue button.
Step 3: Next, you will be redirected to the OTP-verification page. Enter the OTP that you receive on your mobile number
Step 4: Finally, after OTP verification, the status of the income tax payment will be displayed.
Ans: Given below are the steps to download acknowledgement of income tax payment:
Step 1: Visit the official website of the Income Tax Department.
Step 2: You need to log in with your credentials
Step 3: Choose ‘View returns/forms’ in the dropdown option and press the ‘Submit’ button
Step 4: Select the acknowledgement number for downloading ITR-V. You can opt to e-verify your ITR as well.
Step 5: Choose ITR-V/Acknowledgement from ‘Downloads/Status Description’ for downloading the acknowledgement
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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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