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How to Pay Income Tax Online?

8 February 2023

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The government of India levies income tax on everyone's earnings. When a person is required to pay income taxes to the government, the issue of how to do it without difficulty arises. In collaboration with NSDL, the Income Tax Department has made various efforts to simplify it via online income tax payment. This blog will go through how to pay direct taxes online and offline.

How Can I Pay my Income Taxes Online?

Income tax payments may be made online by visiting the website of the NSDL e-tax payment system. Taxpayer may pay their income taxes online by following the procedures outlined below:

Login to NSDL to use the e-tax payment system.
Click on the "e-payment: pay taxes online" option under the services section.
A new tab will appear, displaying numerous forms for e-payment tax. To pay the self-assessment tax online, a taxpayer must pick "ITNS 280."
After clicking on the "Continue" area, a new tab will open in which the taxpayer must pick some obligatory fields such as tax applicable, kind of payment, manner of charge, and so on.
If you are an individual paying self-assessment tax, for example, you must pick 0021-Income tax (other than corporations) in the tax-relevant field and 300-self assessment tax under the payment method.
The taxpayer must then confirm the specifics of the payment, which will be transmitted and processed by the bank. You may pay with online banking or a debit card.
When direct tax is successfully paid, a payment challan is generated. This will include the challan identification number, the payment date, and the bank information used to make the payment.
The challan information must be included throughout the ITR filing process.

Eligibility for Online Tax Payment

You must ensure that you satisfy the requirements outlined in the Income Tax Act to be eligible for online tax payment.

You must be a citizen of India and earn at least Rs. 2.5 lakh per year.
Annual income should exceed three lakhs if you are over 60 and 5 lakhs if you are over 80.
Have a business that complies with Section 44AB criteria or is a cooperative organisation, BOI, AOP, artificial juridical entity, or municipal government (ITR 5)
A resident Indian who owns the property, has a financial stake in a company or is authorised to sign for any accounts kept abroad
If you seek tax deductions according to Sections 90 and 90A or tax relief under Section 91
If you are an assessee required to submit returns by Section 139 (4B) (ITR 7), any firm or companies

How Online Tax Payments Operate

The following factors, which are listed in further detail below, must be present for tax payments to be made online:

PAN:

To pay your income tax, you must have a valid PAN card issued in your name. The PAN card holds the PAN, an alphanumeric 10-digit number. Additionally, the PAN number is required to access the ITR site. The most crucial element if you want to pay your income tax online effectively is your PAN.

TAN:

TAN, also known as Tax Deduction and Collection Account Number, is an additional prerequisite for successfully submitting your income tax payment. According to the Income Tax Act of 1961, the payer must withhold Tax Deduction at Source (TDS) before paying the recipient and submitting the TDS to the IT department. Individuals and organisations engaged in these forms of payments are required to hold TANs.

E-payment:

You may easily make direct tax payments online using a variety of internet platforms if you have a PAN and TAN.

OLTAS:

Online Tax Accounting System (OLTAS) is a database that aids in the management of the Income Tax Department's tax collecting efforts throughout the nation.

ERACS:

The Electronic Return Acceptance and Consolidation System (ERACS) is a web-based tool used to upload TDS, Tax Collection at Source (TCS), and Annual Information Return (AIR) data to the TIN's central computer system.

Allowance for House Rent
Allowance for Leave Travel
Standard deductibility
Medical Assistance
Deductions under Chapter VI-A (Section 80C to 80U)
Loan deduction for higher education (80E)

To claim the preceding deductions and exemptions, the taxpayer must submit the information when completing their tax returns online and provide documentation to their employer. If the employer fails to amend any deductions or exemptions on the employee's Form 16, the employee may claim the same at the time of ITR filing.

Why Should You Pay Your Income Tax Electronically?

Paying income tax online, often known as e-payment, has its advantages. These advantages are readily apparent when e-payment transactions increase, and offline income tax payments decrease. The following are a few advantages of paying income taxes online:

The information is safe and secure.
The challan is saved online and associated with your PAN. The information is accessible in your Income Tax Account. You can get to it whenever you want.
The challan's status may be easily tracked by visiting the Tax Information Centre website.
There is no risk of a penalty since the monies are transferred directly from your account.
With online income tax payment, there is a more significant potential of mistakes in filling out the challan data.
Even if you discover that you made a mistake when filling out the challan, you may halt the payment by cancelling it.

Is It Required To E-Pay Or Pay Taxes Online?

The income tax department has allowed taxpayers to pay their taxes online and offline for convenience. In all circumstances, the data must be reported through the assessed income tax return after the payment.
However, considering the advantages of the e-pay option over the offline mode, taxpayers should choose e-tax payment over an offline method.

Self-Assessment Tax: What Is It?

After subtracting the TDS amount from the advance tax due, you must determine the ultimate income obligation for the financial year and the revenue source. The maximum amount the person is due is computed at year's end and is known as the self-assessment tax if any taxes are unpaid before submitting an income tax return.

Why Is Self-Assessment Tax (Sat) Required?

Individuals that pay for SAT often have money from other sources. For instance, if you failed to disclose a source of income while completing the last instalment of advance tax. Or it's possible that TDS wasn't deducted or done at a lower rate than the higher tax rate that applied to your income tax return.

Additionally, there is a potential that salaried persons may fail to disclose to their employer any income they get from fixed deposits or short-term bonds, which would prevent that income from being deducted from their taxes. Self-assessment tax will be necessary for such circumstances. To avoid paying interest on the tax amount, it is best to pay tax as soon as you can and before the tax filing deadline.

What Should You Do If You Choose The Incorrect Assessment Year?

If the taxpayer selects the incorrect assessment year, the assessee has seven days to update the data for offline payment through the bank. If the assessee discovers the error after the seven days have expired, they must apply to the appropriate income tax official for a rectification.

Similarly, a request for correction must be submitted to the jurisdictional official who is authorised to correct it in the event of online payment.

Who Is Required to Submit an ITR?

The following are the numerous ITR forms and their application to taxpayers who must submit an ITR:

ITR 1:

For people who are residents (other than usual residents) and have taxable income of up to Rs.50 lakh from salaries, one residential property, other sources (interest, etc.), and agricultural income of up to Rs.5,000.

ITR 2:

For individuals and HUFs who do not have income from business or professional profits and gains. Individuals with capital gains and agricultural income over Rs. 5,000 must utilise this return form.

ITR 3:

For individuals and HUFs with income from business or profession profits and gains. The return might include house property, wages, capital gains, etc.

ITR 4:

Individuals, HUFs, and Firms (other than LLP) residing in India with a total income of up to Rs.50 lakh and income from business and profession estimated under sections 44AD, 44ADA, or 44AE.

ITR 5:

This income tax return is for businesses, LLPs, AOPs (Association of Persons) and BOIs (Body of Individuals), Artificial Juridical Persons (AJP), and the estate of a dead person.

Income tax filing is accessible on Income Tax India's e-filing website. You may submit an ITR by logging into your account and going to the e-filing website. The Income Tax Department makes income tax filing a straightforward and uncomplicated procedure possible.

26AS is an annual statement that shows the tax credit available against an individual PAN. In layman's words, it indicates the tax deducted on an individual PAN for a specific income by the businesses required to remove the tax. Entities must submit TDS returns and provide TDS information at each PAN level in the returns.

What Exactly Is 26as?

Conclusion The ITR (Income Tax Return) filing procedure will be handled online. All document verification and uploading will occur on an internet platform, saving time and money for both the taxpayer and the government agency. This will enable taxpayers to submit their income tax returns in their spare time.

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FAQs How to Pay Income Tax Online

What exactly is an income return?

It is a regulated form in which a person's income is generated in a fiscal year, and taxes paid on that income are notified to the Income-tax Department. Multiple conditions of income returns are specified for submitting returns for various payment types. These forms are available for download at www.incometaxindia.gov.in.

Is it required to include any papers with the income tax return?

ITR return forms have no attachments. Therefore, the taxpayer must not include documents (such as evidence of investment, TDS certificates, etc.) with the income tax return (whether filed manually or electronically). However, these records should be kept by the taxpayer and submitted before tax authorities when requested in the circumstances such as assessment, inquiry, etc.

Who is eligible to utilise ITR-3?

A person or Hindu Undivided Family who is a partner in a company and has income subject to income tax in their/their hands under the heading "Profits or profits of business or profession" may utilise Return Form ITR-3. This income is limited to interest, salary, bonus, commission, and other compensation, by whatever name called, owing to, or received by him from such firm.
If a business partner has no income from the firm in the form of interest, salary, etc., and only exempt income in the form of a share of the firm's profit, he must use Form ITR-3 and not Form ITR-2.

What is the Income-tax Department's e-filing service?

The Income-tax Department has made a free e-filing utility (i.e., software) for generating e-returns and electronically submitting returns. The Department's e-filing facility is primary and easy to use and comes with instructions on how to utilise it.
Taxpayers may offer their income tax returns by utilising the e-filing application. The utility may be obtained by visiting www.incometaxindiaefiling.gov.in.

What is the difference between electronic filing and electronic payment?

E-payment electronically pays taxes (through net banking or SBI's debit/credit card), while e-filing electronically submits income tax returns. The taxpayer may conveniently and swiftly fulfil his tax and return filing responsibilities using the e-payment and e-filing service.

What are the advantages of submitting my income tax return?

Filing returns is your responsibility, and it grants you the honour of voluntarily contributing to the country’s progress. Aside from that, your income-tax returns establish your creditworthiness in the eyes of financial organisations, allowing you to access a variety of economic advantages such as bank credits, etc.

Is it required to submit an income tax return if I have no positive income?

If you have a loss in the fiscal year that you want to carry over to the next year for adjustment against future year(s) positive income, you must file a claim of loss by the due date.

Am I obligated to preserve a copy of the filed return as evidence, and if so, for how long?

Yes, since legal actions under the Income-tax Act may be commenced up to four or six years (depending on the situation) before the current fiscal year, you must save such records for at least this time.
However, in some instances, actions might be commenced even after six years. Therefore, keeping a copy of the return for as long as feasible is best. Furthermore, with the advent of e-filing, saving a copy of the income tax return is relatively straightforward.

Why is return filing required even when I have paid all my taxes and interest, and no refund is owed to me?

Amounts paid as advance tax and withheld as TDS or collected as TCS will take on the character of your tax payable only once you have completed your self-assessment of your income.
This self-assessment is sent to the Department via the submission of the income tax return. Only then does the government acquire ownership of the taxes you have paid. Return filing is crucial for this procedure and has therefore been made obligatory. Failure will result in a penalty.

What should you do if there are disparities between total TDS and TDS credit reported on Form 26AS?

Every individual who deducts tax at source is required to report the amount of tax deducted to the Income-tax Department. The information will include the deductee's name, Permanent Account Number, the amount of tax deducted, the amount paid to the deductee, the date of payment of TDS to the government’s credit, and so on. The Income-tax Department will amend the deductee's Form 26AS based on the TDS information given by the deductor.

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