Online Advance Tax Payment: Process, Benefits, and Tips

The government uses an advance tax method to reduce end-of-year backlogs, so if your estimated liability is more than Rs. 10,000, you are expected to make quarterly payments of your tax dues. By choosing advance tax payment online, you can opt for multiple smaller payments over the course of the financial year. By making timely advance tax payments, you can save on penal interest charges under Sections 234B and 234C due to short payment of taxes.

The use of advance tax mechanism is more common among self-employed individuals and professionals as they are more prone to witness a fluctuation in their income during the financial year. Many prefer the e-payment of advance tax dues because it reduces the paperwork required and gives you can get proof of payments instantaneously. Additional digital records are often easier to maintain over an extended period of time and the submission process of digital documents is also more streamlined.

Currently the easiest way for an individual to make online advance tax payment is via the income tax e-filing portal. There are however a few pre-requisites for making online advance tax payments, such as:

• Valid PAN registered on the Income Tax e-filing portal and password for login
• An operational mobile number registered with the tax department to receive OTP
• Access to supported online advance tax payment modes such as Net Banking, UPI, Debit Card, etc.
• Choosing Correct Assessment Year, since advance tax payment can only be made for the current fiscal
• Choosing the appropriate link for advance tax payment

If you can fulfill the above-mentioned requirements, you can opt to make online advance tax payment.

Below are the key steps involved in order to make online payment of advance tax.

Online payment of advance tax and generating a receipt is only the first step of the process. The details of the payment such as BSR code, Serial Number, advance tax paid, etc. need to kept handy as you need to include the details in your Income Tax Returns. These details need to be provided under the “Tax Paid and Verification” section of the Income Tax Return Form.

If you miss this step, the system may not reflect your payment, leading to tax demands and penalties being communicated at a later date. So, keeping the details of online advance tax payment handy is key to ensuring that no mismatch occurs when your income tax return is processed.

When you pay your advance tax online, you can skip the queue at the bank and can complete the task anytime as per your convenience. There’s instant confirmation, and you usually receive a transaction ID that lets you track the payment. Below are a few of the benefits of online advance tax payment to keep in mind:

• No need to visit a bank; payments can be made 24x7
• Receive the advance tax payment receipt immediately after payment
• Online forms auto-validate details, reducing mistakes
• Payments are processed via authorised bank portals
• Reduced dependency on paper documents

Most importantly, advance tax payment online helps people stay up to date with their dues without sudden lump-sum tax burden at the end of the year. By paying advance tax, you can spread out your tax payments and maintain better control over your finances. This can be particularly helpful if you have unpredictable earnings or multiple income sources.