The income you earn is taxed in three ways, namely, a) Tax deducted at source (TDS), b) Advance tax payments, and c) Self- assessment taxes paid before filing your income tax return (ITR).
You are liable to pay advance tax if your estimated income meets the criteria as stated in the current income tax laws. Abhishek Soni, CEO, Tax2win, an ITR filing company says, “Normally, an individual whose total tax liability exceeds Rs 10,000 in a financial year is liable to pay advance tax. However, as salary received by employees is subject to TDS, in that case, they are not mandatorily required to pay advance tax on salary income. However, if you have income from other sources such as interest income or capital gains that are taxable which are not reported to your employer, then you are liable to pay advance tax on such sources of income.”
Apart from advance tax, before you start filing your ITR, you are required to calculate your total tax liability on the income earned during the previous financial year and deposit any balance tax payable as self-assessment tax.
Mistakes to avoid while paying tax
a) At the time of paying tax, either self-assessment or advance tax, make sure you select the assessment year correctly. Most people find the terms assessment year and financial year confusing. Assessment year is the year immediately following the financial year for which the return has to be filed.
For FY 2017-18, the assessment year would be 2018-19 and for FY 2018-19, the assessment year will be 2019-20. Therefore, if you are making advance tax payments for the ongoing financial year, which is FY 2018-19, you will select AY 2019-20. On the other hand, if you are paying self-assessment tax for the previous FY, i.e., FY 2017-18, then you will select AY 2018-19.
b) Another mistake which is usually made is not selecting the correct codes. At the time of paying tax online, you are required to select radio buttons for different codes representing different types of tax payments. If the wrong radio button/code is selected then the tax payment made by you will not be reflected in your Form 26AS for the correct assessment year. While paying taxes as an individual, always select code (0021) – Income Tax other than companies.
At the time of making an advance tax payment, select next financial year (because that will be the assessment year) and code, ‘(100) – Advance Tax’. On the other hand, if you are paying self-assessment taxes (to be paid before filing ITR), select the current financial year as assessment year and code ‘(300) – Self-assessment tax’. ‘Code (400) – Tax on regular assessment’ is paid when you are paying tax following a notice received by you from the income tax department.
Soni explains how individuals can pay income tax online and offline:
1. Go to www.tin-nsdl.com and click on ‘Pay Taxes Online’ on the homepage.
2. You will be redirected to a different page. On that page under the last option (Non-TDS/TCS), select ‘Challan No. /ITNS 280′ which is the current applicable challan for individuals’ income tax payments. A new e-payment page will appear on your screen.
3. On the page, select ‘(0021) Income Tax (Other than companies)’. Enter other details such as Permanent Account Number (PAN), assessment year, and address details. Select the type of payment, i.e., (100) Advance Tax or (300) Self-Assessment Tax.
4. Select the mode of payment, i.e., net banking or debit card. You can pay tax via debit card of only six banks namely, Canara Bank, HDFC Bank, ICICI Bank, Indian Bank, Punjab National Bank, and State Bank of India.
5. Enter the captcha code. Before clicking on ‘proceed’ ensure that you have entered all the information correctly.
6. Once you click on ‘Proceed’, a new page will appear on your screen. Here also you are required to confirm that the information mentioned is correct. Click on ‘Submit to the bank’ button.
7. You will be redirected to the website of your bank. Here you will be required to log-in to net banking or enter your debit card details as applicable, and enter the tax to be paid by you.
Image credit: Tax2win
8. Once the payment is made by you, a receipt will be generated. This receipt should contain details such as the amount of taxes paid by you, BSR Code, Challan serial number, date of challan etc. These details will be required at the time of filing your ITR.
Image credit: Tax2win
If you are unable to make tax payments online, then you have the option to pay offline by visiting your bank branch. Follow the steps below to make your payment offline.
1. Visit the bank branch and ask for the applicable tax payment challan form – in this case Challan 280.
2. Fill in the details as required in the form. The offline form is similar to the one shown on the online platform, i.e., on the TIN-NSDL website. The details asked in the form are also the same.
3. Go to the relevant bank’s counter and submit the filled-in Challan 280 form along with the money. You can make tax payment either in cash or cheque. However, the bank may be reluctant to accept large cash payments; therefore paying via cheque is advisable. Also, it is easier to trace and keep a record of the payment made by you. If you wish to make the payment via cheque, make the cheque in favour of “Income Tax Department.”
4. Bank official will take the money and challan from you and give you a receipt by tearing off a portion of the challan, filling in details of payment and stamping it.
Once you have paid your tax either online or offline, you should keep the receipts safely as proof of payment. After paying tax it can take up to 10 days to reflect in your Form 26AS. Your income tax payment should show in your Form 26AS as ‘Advance tax’ or ‘Self assessment tax’ or the type of tax paid.
Challan status inquiry
Once you have made the tax payment, you can check its status on the TIN-NSDL website. To check the status, follow these steps:
1. On the TIN-NSDL website, click on ‘Services’ and select ‘Challan Status Inquiry’.
2. You will be redirected to a new page. On that page, under the ‘For Taxpayers’ head, select ‘CIN based view’. Remember as a taxpayer, you can use only CIN based view to know the status of the tax paid by you.
3. You will be required to mention certain details from the challan receipt, i.e., BSR code of the collecting branch, challan tender date, and challan serial number. Enter the captcha code and click on view.
Since it takes 5-10 days in updating the status, it will show any of the three results:
No records: This means that the bank is yet to send your tax payment to the income tax department.
Amount Matched: This means that the bank has sent your tax payment to the income tax department but the department has yet to acknowledge it.
Received by TIN: It means that the income tax department has received your tax payment. It will show the date on which your payment was received.
How to reprint Challan 280
In case you have misplaced your challan receipt, you can download the same by logging in to your net banking account if the payment is made by net banking. To download the same, login to your account via net-banking, go to the tax-centre and click on ‘reprint challan’ to do the same.
On the other hand, if you have made payment offline either via cash/cheque or online through debit card, then you will be required to contact the bank’s branch, adds Soni.