The Income Tax Act, 1961 requires every taxpayer to pay income tax after every financial year if the taxpayer’s income exceeds the specified threshold limit. For example, for individual taxpayers below 60 years of age, the threshold limit is INR 2.5 lakhs. So, if your income exceeds INR 2.5 lakhs, you might have to pay tax on your income.
When it comes to the payment of tax, you can do so online. The income tax department allows you the facility to pay income tax online. Let’s understand how you can pay income tax online and its other aspects.
What is income tax e-payment online?
Online tax payment or the income tax e-payment online is the facility wherein you can pay your tax liability online through digital payment channels. This is easy and convenient and lets you fulfil the federal duty of paying tax instantly.
A step-by-step guide on paying income tax online
Here is a step-by-step guide using which you would be able to pay income tax online in the easiest manner
- Go to the website http://www.tin-nsdl.com
- Under the ‘Services’ option click on ‘e-payment: Pay Taxes Online’
- A new window would open and a list of various challans and forms would be shown which include the following –
- Challan no./ITNS 280
- Challan no./ITNS 281
- Challan no./ITNS 282
- Challan no./ITNS 283
- Challan no./ITNS 284
- Challan no./ITNS 285
- Challan no./ITNS 286
- Challan no./ITNS 287
- Form 26 QB
- Form 26 QC
- Form 26 QD
- Demand payment for the three forms, i.e. Form 26 QB, Form 26 QC and Form 26 QD
- Choose the suitable challan number or form and provide the details required therein. These details include your PAN or TAN number, address, name of the bank, accounting head under which you are paying the tax, etc.
- Once you provide the details and submit them, a confirmation page would be shown. If the PAN or TAN number that you have entered is the same as that recorded on the income tax website, the name of the taxpayer would be auto-populated
- Once you confirm the details, you would be directed to your bank’s net banking platform
- Log into your net banking account with your registered user ID and password
- Make the payment of the tax due
- Once the payment is successful, you would receive a counterfoil of the challan which would contain important information like the details of the payment, bank details, CIN number, etc. You should retain this counterfoil as proof of payment of tax.
A step-by-step guide on paying income tax offline
Besides the online mode of tax payment, the income tax department also allows the offline mode. To pay income tax offline, you would have to pay through your bank. To do so, the steps are as follows
- Visit the branch of your bank and avail of the required challan or form
- Fill up the challan or form providing all the necessary details contained therein. The online and offline forms and challans are the same. So, the details contained therein would also be the same
- Provide your PAN/TAN number correctly
- Go to the bank’s counter and deposit the challan and make the payment for the tax liability. You can make payment in cash or through a cheque. If paying through a cheque, draw the cheque in favour of the income tax department
- The bank’s executive would assess your challan or form, collect the money, stamp the challan/form and give you a counter receipt of the same
- You should keep the receipt handy as it is the proof of payment of tax. After paying, it would take some time for the payment to be recorded by the income tax department.
Mandatory income tax e-payment online
Some taxpayers are mandated to pay income tax online. Such taxpayers include the following –
- Any type of company, i.e. private limited company, public limited company or a one-person company
- Any other type of taxpayer, except companies, who are required to get their accounts audited under the provisions of Section 44 AB of the Income Tax Act, 1961
Eligibility parameters for online tax payment
To deposit income tax online, the following eligibility parameters should be met –
- You should have a net banking facility in an authorised bank
- You should have a working internet connection
- You should be an Indian citizen with a tax liability
- You can be a company or any other type of taxpayer with auditing requirements under Section 44AB
- You should have a taxable income
Basics of online tax payment
There are some common elements of paying taxes online. These elements are as follows
- PAN or TAN number
This number is a mandatory requirement for paying taxes online. The number helps the income tax department identify the taxpayer in its database.
- Net banking
Online tax payment is supported only through the net banking facility of authorised banks. You should, thus, be registered for the net banking facility to pay income tax online.
OLTAS stands for Online Tax Accounting System. It is the income tax department’s database using which the department collects online tax payments across the country.
ERACS stands for Electronic Return Acceptance and Consolidation System. It is an interface between you, the taxpayer, and a website-based utility. It helps upload the TDS or TCS certificates and other returns on the TIN’s main database
Benefits of online tax payment
Paying income tax online is beneficial because of the following reasons –
- It is instant and hassle-free
- You don’t have to physically visit the bank to make the payment
- It is highly convenient and can be done through your home or office
- It saves time
- The online payment gateway is secured and encrypted allowing you to pay your taxes safely
Documents needed for making online tax payment
In order to pay income tax online, you are required to have some documents handy. These documents include the following
- Your bank account number
- Income tax return
- PAN/TAN card
- Aadhaar card
- Login details of your income tax online account
- Login details of your net banking account
List of authorised banks for online tax payment
As mentioned earlier, you can pay income tax online through the net banking facility offered by authorised banks. These authorised banks include the following
|Bank of Baroda
|Bank of India
|Bank of Maharashtra
|Central Bank of India
|Indian Overseas Bank
|Jammu & Kashmir Bank
|Oriental Bank of Commerce
|Punjab National Bank
|Punjab & Sind Bank
|State Bank of India
|Union Bank of India
|United Bank of India
Things to remember when paying taxes online
When you opt to pay income tax online, either due to the mandatory requirement or voluntarily, you should keep the following points in mind –
- Calculate and pay the correct tax liability to avoid any defaults and successive penalties
- Keep the user ID and password of your net banking account handy
- Challan 280 is the most common document needed to pay income tax as well as corporate tax online. Fill up the challan correctly providing all the right details
- Ensure that the internet connection is not interrupted during the payment gateway
- Pay the tax within the due date to avoid a late payment penalty
Modes of saving taxes
While paying income tax online is easy and convenient, you should also know how you can reduce your tax liability. The Income Tax Act, 1961, provides various options to reduce your tax liability and save taxes. Some of the tax reliefs allowed under the Act include the following
- The benefit under Section 80C
Section 80C of the Act allows deductions up to INR 1.5 lakhs on eligible investments and expenses. These eligible investments and expenses are as follows
- Life insurance premiums, up to 10% of the sum assured
- ELSS mutual fund schemes
- 5-year fixed deposits with banks or post offices
- EPF or PPF contributions
- Sukanya Samriddhi Yojana
- Senior Citizen Saving Scheme
- Tuition fee paid for dependent children
- Stamp duty and registration charges on a house property
- Home loan principal repayment, etc.
- The benefit under Section 80D
If you invest in health insurance, the premium paid would be allowed as a deduction under Section 80D. The deduction limit is INR 25,000 for individuals below 60 years and INR 50,000 for senior citizens. The additional deduction, of the same limit, can be claimed if you pay the premium for your parents’ health insurance plan.
- NPS benefit
nvestment into the NPS scheme allows you to claim deduction under Section 80CCD (1) which is a part of the limit of Section 80C. However, an additional deduction of up to INR 50,000 can be claimed under Section 80CCD (1B).
- Home loan interest benefit
Home loan interest paid in a financial year is allowed as an exemption under Section 24(b) up to a limit of INR 2 lakhs. Moreover, if you fulfil specified conditions, you can claim an additional exemption of up to INR 1.5 lakhs on the interest payments under Section 80 EEA.
So, use these avenues to save taxes and if you have any tax liability, pay it off online with ease and convenience.
Even if you don’t have a registered net banking account, you can pay taxes online. To do so, you can use the bank account of another individual who has a registered net banking facility. Just mention your tax filing details, like the PAN or TAN number, to pay the tax liability.
No, no additional charges are payable to pay taxes using the online mode.
Besides income tax, you can also pay the following types of taxes online
- TDS or TCS
- Equalization Levy
- Corporate Tax
- Securities Transaction Tax
- Other types of direct taxes like entertainment tax, etc.
No, you can pay taxes online or offline. Online tax payment is mandatory for companies. However, if you have to get your accounts audited as per the rules of Section 44 AB, then you would have to pay your taxes online, mandatorily.
No, currently the income tax department accepts only the net banking mode of online payment.