Wednesday, May 2, 2012

How to pay Income Tax online in India

When the mammoth being called Internet came into existence, who would have thought it would grow by such leaps and bounds that we could get tasks done with a few clicks! Shopping, auctioning, studying, paying bills….all these tasks and more are at our fingertips. One of the major tasks is paying taxes. Paying income tax online in India is now as easy as learning 1-2-3. No more long queues and lazy clerks to deal with!

How to pay Income Tax online in India?
You pay income tax online in India through a service called e-payment of taxes. In simple words, it means that you use the Internet using net-Banking facility to make your income tax payments in India.

What is required to be able to pay Income Tax online in India?
As mentioned previously, e-payment of taxes in India requires you to make use of net-Banking facility. Hence, one very important requirement to be able to pay Income Tax online in India is to have a net-Banking account. This makes it easy to avail of the e-payment facilities to pay your taxes online in India. However, the net-Banking account should be with an authorised Bank only and not just any Bank in India. You should check out the list of authorised Banks that are listed on the official NSDL-TIN website: List of Banks

Is it compulsory to pay Income Tax online in India?
Yes, as per the information given at the official website of the Income Tax, India, all corporate assesses in India must pay income tax online. This is also applicable for assesses (other than corporate ones) to whom provisions of section 44AB of the Income Tax Act, 1961 are applicable. Moreover, it is also compulsory for these two groups of assesses to make the TDS/TCS payment (Challan 281) online.

What are the steps to pay Income Tax online in India?
It just requires a few steps to begin online payment of income tax in India. First, you should log on to this website. Next, go to ‘E-payment – pay taxes online’. Then click on the button ‘Please Click Here’ and select the required challan.

Which challan should be selected when paying income tax online in India?
The official website clearly states the different types of challans for the different groups of assesses. There are basically 2 main groups: (1) TDS/TCS and (2) Non-TDS/TCS
(1) TDS/TCS Challan: There is just one challan for Tax Deducted at Source / Tax Collected at Source (TDS/TCS) from corporates or non-corporates – Challan No./ITNS 281.
(2) Non-TDS/TCS Challans: There are 3 challans in this category, depending on the assesses.
(a) Payment of Income tax & Corporation Tax: Challan No./ITNS 280
(b) Payment of Security Transaction Tax, Hotel Receipts Tax, Estate Duty, Interest Tax, Wealth Tax, Expenditure Tax /Other direct taxes & Gift tax: Challan No./ITNS 282
(c) Payment of Banking Cash Transaction Tax and Fringe Benefits Tax: Challan No./ITNS 283

What information is required when paying Income Tax online in India?
After selecting the right challan, the following information is what you will need to fill when paying tax online in India:
(i) Permanent Account Number (PAN) for non-TDS payments and Tax Deduction/Collection Account Number (TAN) for TDS payments
(ii) Name and address of the person paying the tax
(iii) Assessment Year
(iv) Major Head Code
(v) Minor Head Code
(vi) Type of payment
(vii) Select the bank name from the options provided

Very Important Note: If the PAN/TAN is not entered 100% correctly, further processing cannot take place. If the PAN/TAN that you entered is not available in the database of the Income Tax Department, then you cannot proceed with the payment of tax.

Is it possible to make changes in the data provided while paying Income Tax online in India?
Yes, it is possible to make changes in the data provided while paying income tax online in India if you make the changes before you click on the final ‘submit’ button. After you have filled in all the required information, you will see a ‘proceed’ button at the end; on clicking that you will immediately see all the details that you entered + your name + you PAN/TAN number. So now you need to carefully read all the details and check if it is 100% accurate. If you find any mistakes, just click on the ‘Edit’ button and you can make the changes.

Of course, once you click on the final ‘Submit’ button, you cannot make any changes!

As you can see, a few taps on the keyboard and you have completed the major task of paying your income tax!

Important Note: I am not a C.A., Income Tax Consultant or financial expert. Hence, readers are requested to clarify the information provided before filing their income tax returns. For complete details please refer: Income Tax India

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