Income that comes from various resources including business, salary, rent, business etc in same financial year and tax imposed on that income by the government. So advance tax is tax that individual pay for collective income. One important point that individual must remember is that tax must be paid in same financial year.
Pay as you earn is another name of advance tax. This tax policy will be effective if your income tax liability is more than 10000 in a year and individual need to pay this tax in year you earn that amount any get freedom from all tax related issues.
If you are salaried employee then you do not need to pay this tax because of government policies. Anyone who earn from other resources than salary then he need to pay advance tax as per their income. Condition is quite similar for salaried employee means if salaried employee is earning from other sources then he will have to pay advance tax too as per extra income.
Resources that come under advance tax:
1. Income from house property or from rent.
2. Income from share or capital gain.
3. Income from lottery or reward price.
4. Income from fixed deposit interest.
It is quite easy to calculate advance tax as per their income that they earn from different tasks and services. To calculate tax easily user need to remember following steps:
1. Total Advance Tax: If the tax amount exceeds Rs.10,000 then you will have to pay advance tax.
2. Determine the Income: Finalize the income you earn other than your monthly salary. It is important to include any ongoing pacts that might pay out later.
3. Sum of Income: Calculate your other income that you might earn in the form of rent, interest income, etc. Deduct the TDS deducted from your salaried income.
4. Deduct the Expenses: Deduct your expenses from the income. You can deduct expenses related to your work (freelancing) such as rent of the work place, travel expense, internet and phone costs.
Taxpayers can pay their tax any bank branch approved and authorized by the income tax department through challans or via internet banking. User can pay tax amount at any nationalized bank including SBI, ICICI bank, HDFC bank, RBI, Syndicate bank and other banks.
Income tax department of India avails the facility to pay tax online easily this will help authorities to handle queries and users request easily. To complete the process easily user need to follow steps outlined below:
1. First of all open official portal of income tax department.
2. To pay to amount choose advance tax challan.
3. Enter your valid information in form including your name, mobile number, residential address, bank account number, email address, other security details along with captcha to go to next steps.
4. After entering your valid details you will be redirected to payment page where you will pay specific amount. Never forget to verify the amount to avoid any possible mistake.
5. Now enter your challan number and other payment related details.
6. Never forget to update your payment related updates to income tax department.
If you will fail to deposit you payment before last date of due date then you have of pay 1% of tax amount before final deadline of payment.
Person belongs to 60 years plus age group and not belongs to any business or corporate group then you will get exemption in this tax. If someone who is associated with presumptive schemes then he will get exemption in tax payment. If business turnover is more than two crores then this policy will be effective and respective person need to pay tax as per their income. From last financial year this law will be imposed to lawyers, doctors and other professionals who earn more than 50 lakhs annually.
1. Advance tax saves people from defaulting on their tax payments.
2. By paying tax in advance, taxpayers do not have to worry about money shortage or tax payments at the last moment.
3. Advance tax helps in reducing stress of taxpayers.
4. It speeds up the tax collection process.
5. It helps businesses in managing their finances well and provides an idea of the income they have earned during the year.
6. It increases government funds as the government can earn an interest on the collected amount.
User can select this form while opting for online tax payment. Always use challan 280 to pay your income tax online on official portal of income tax department of India. If users want to pay tax offline then download form and submit it at any authorized bank.
Income tax department will refund your amount if they will find any extra amount during auditing of report. If taxpayer want to claim refund then he need to fill form 30 then claim will be settled by the authorities.