Under income tax laws, it is obligatory for individual assessees to evaluate their expected annual income, and if tax on such income exceeds ?10,000, to pay advance tax.

The second instalment of advance tax for financial year 2018-19 is due on 15 September. Assessees falling under the ambit of advance tax payment are required to pay 45% of the evaluated tax liability. Here is how to estimate and pay advance tax.

Estimate taxable income

Section 208 of the Income Tax Act, 1961, makes it obligatory for individual assessees to evaluate their expected annual income, and if tax on such income exceeds ?10,000, to pay advance tax. While estimating the income, take into consideration income under all the five sources of incomes heads—income from salary, business and profession, house property, capital gains and income from other sources. Senior citizens (above 60 years of age) not having income from business or profession are not required to pay advance tax.

Evaluate liability

There are four advance tax instalment dates. The first instalment becomes due on or before 15 June, by when 15% of the evaluated total tax should be paid. The second instalment becomes due on 15 September by when 45% of the estimated tax should be paid off. The next due date is 15 December by when 75% of the tax should be paid and by the last due date of 15 March, the entire tax liability needs to be cleared.

Say if after taking into account all five income heads, your tax liability for FY18-19 is estimated to be ?2 lakh, you were supposed to pay ?90,000 (45 % of ?2 lakh) by 15 September. However, if you have already paid tax to the tune of ?50,000 either through taxes deducted at source, or the advance tax instalment in June, then you are required to pay only the balance ?40,000 this time.

If you don’t pay the advance tax or the shortfall, you will have to pay it along with interest later.

How to pay

You can pay advance tax offline using tax payment challans (challan number 280) at bank branches authorised by the I-T department. To pay it online, log on to the department website (incometaxindia.gov.in) and click on e-Pay taxes on the right hand side. You will be directed to the National Securities Depository Ltd (NSDL) website. Click on challan no./ITNS 280, and fill the details. In type of payment, click on “100 Advance Tax” and make the payment.