- Estimate your total income for the financial year from all sources, including salary, business income, capital gains, interest, rental income, etc.
2. Calculate Taxable Income
- Deduct eligible deductions under various sections of the Income Tax Act from your estimated total income to arrive at your taxable income.
3. Apply Applicable Tax Rates
- Use the income tax slabs applicable for the financial year to calculate your income tax liability.
4. Determine Advance Tax Liability
- Calculate the advance tax payable based on the tax liability and the due dates for advance tax payments.
5. Due Dates for Advance Tax Payment
- Advance tax is paid in installments during the financial year on specific due dates:
- On or before 15th June: At least 15% of the advance tax liability.
- On or before 15th September: At least 45% of the advance tax liability.
- On or before 15th December: At least 75% of the advance tax liability.
- On or before 15th March: 100% of the advance tax liability.
6. Pay Advance Tax
- Deposit the advance tax amount using the challan ITNS 280 at authorized banks or through the online tax payment facility.
7. Maintain Records
- Keep records of the advance tax payments, such as bank challans, for future reference.
8. File Income Tax Return
- After the end of the financial year, file your income tax return using the appropriate ITR form based on your income sources and other criteria.
9. Report Advance Tax Payments
- While filing your income tax return, report the advance tax payments made during the financial year in the appropriate section of the form.
10. Pay Remaining Tax (if applicable)
- If there is any additional tax liability after considering advance tax payments, pay the remaining tax along with interest, if applicable.
11. E-Verify the Income Tax Return
- After filing your return, e-verify it using any of the available methods like Aadhaar OTP, Net Banking, Demat Account, Bank Account, or EVC (Electronic Verification Code).
- E-verification must be done within 120 days of filing the return; otherwise, the return will not be considered valid.
By paying advance tax on time and accurately, you can avoid interest and penalties for underpayment of taxes and ensure compliance with the income tax laws in India.
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