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Tata Capital > Blog > Generic > What is Advance Tax Payment and How to Calculate it?


What is Advance Tax Payment and How to Calculate it?

What is Advance Tax Payment and How to Calculate it?

Navigating the world of taxes can sometimes feel like traversing a maze. One term that often crops up in discussions yet might seem elusive is the advance tax payment. So, what exactly does it entail? More importantly, how do you go about its computation? In this article, we will delve into the intricacies of advance tax payment and explore the steps to calculate advance tax with precision.

Unraveling Advance Tax Payment

At its core, advance tax payment represents the tax paid in advance instead of accumulating it for a lump-sum payment at the year's end. It's a mechanism devised by the government to ensure a consistent inflow of revenue throughout the year.

For taxpayers, be it businesses or individuals, whose tax liability surpasses a specific benchmark, making this preemptive payment isn't just advisable – it's mandatory and typically made in quarterly installments.

Why the Emphasis on Advance Tax Payment?

Promotes Financial Prudence: Spaced-out tax payments inculcate financial discipline. It takes away the stress of having to gather a lot of money at the end of the year and makes sure your finances stay stable all year long.

Bypassing Penalties: Failing to make an advance tax payment might result in penalties. The governing bodies charge interest on the unpaid sum, intensifying the overall tax dues.

Uninterrupted Cash Flow for the Government: Through consistent tax inflow via advance payments, the government enjoys the luxury of a predictable revenue stream. This is pivotal for adept budgetary planning and allocation.

Steps to Calculate Advance Tax

Having grasped the essence of advance tax payment, let’s focus on calculating advance tax. What might seem like a formidable task can be distilled into clear, manageable steps:

Forecast Total Income: Project the entirety of your income for the upcoming fiscal year. This would encapsulate all earnings, from salaries to rental incomes, interest dividends, and entrepreneurial profits.

Factor in Allowances and Deductions: Subsequently, deduct any exemptions and deductions you're entitled to from the projected total. This could encompass deductions from various sections depending on your individual profile.

Ascertain Gross Tax Liability: On the arrived net taxable income, apply the current tax rates to deduce the gross tax liability for the said year.

Consider TDS and TCS: Now, deduct any tax deducted at source (TDS) or tax collected at source (TCS) from this gross figure. The resulting number will be the advance tax payment you're obligated to make.

Break it Down: Finally, partition the advance tax payment calculation amount into the respective number of installments, in accordance with tax norms.

Modernizing Payments: Opting for Advance Tax Payment Online

In an era where virtually everything is moving online, the tax payment system is no exception. Leveraging digital platforms to make your advance tax payment online is not just a nod to convenience but also a testament to efficiency, security, and time-saving. Here's an expansive look at the process and its undeniable benefits:

Ease of Access: Unlike traditional methods that might require visits to banks or financial institutions, opting for online advance tax payment ensures you can make payments from anywhere, at any time. Whether you're in your office, at home, or even on vacation, the tax portal is just a few clicks away.

Navigate to the Official Tax Web Portal: Start by directing your browser to the official tax portal sanctioned by the government. Ensure that the website is secure, typically indicated by a lock symbol in the address bar, safeguarding your personal and financial details.

Authenticate via Credentials: Log in using your unique taxpayer ID and password. If you're a first-time user, you might need to register and create an account, which is generally a straightforward process.

Head to the Payment Section: Once logged in, look for the payment section, usually labeled as “e-Pay Tax” or something similar. This section is designed to guide taxpayers through the payment process seamlessly.

Furnish the Details: As you proceed, you'll be prompted to enter specific details about your tax payment. This might include the type of tax, the assessment year, the address, and other pertinent details. Ensure all information is accurate to avoid any future discrepancies.

Select a Payment Method: The advance tax payment online system typically offers multiple payment methods, including net banking, credit cards, and UPI. Choose the one that's most convenient for you.

Confirmation and Receipt: Once the payment is successfully made, you will receive a confirmation on the screen, along with a digital receipt. It's a good practice to save or print this receipt for future reference or documentation purposes.

Safety and Security: One of the prime benefits of making your advance tax payment online is the high security that digital platforms offer. Encrypted transactions, OTP verifications, and secure gateways ensure your data and money are well-protected.

History and Records: Another advantage of online payments is the ease of access to past records. Most platforms store your payment history, allowing you to retrieve and review previous transactions whenever necessary.

The Perks of Going Digital

Making your online advance tax payment offers numerous advantages. Apart from the sheer convenience, it reduces the chances of manual errors, saves time, provides instant confirmation, and ensures you can pay your dues before the deadline even if you're on the move. In today's digital age, it's a modern solution for a traditional obligation.


Filing income tax returns (ITR) is now a streamlined and user-friendly task, no longer requiring professional assistance. This regular practice not only aligns you with tax compliance but also enhances your credibility when applying for financial aid like personal loans.

A robust ITR history is particularly beneficial when negotiating for personal loans that cater to various big-scale expenditures, diminishing reliance on your salary. Personal loans from TATA Capital offer attractive interest rates, with flexible repayment tenures. The process is simplified, with no collateral required, ensuring your assets are not at risk.

TATA Capital promises a seamless experience from application to disbursement, facilitated by digital convenience. For an easy application and a detailed understanding of this hassle-free process, visit TATA Capital today. Achieve your financial aspirations with just a click.

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