Payment of taxes

Introduction

Under the Income-tax Act, an assessee is liable for payment of taxes in various forms such as advance tax, self-assessment tax, TDS, TCS, Dividend distribution tax, etc. Such payment can be made online or offline in the prescribed form.

1. Payment of taxes on income

1.1 Payment of advance tax

Main article: Payment of Advance Tax

An assessee who is liable to pay advance tax is required to make the payment through Challan No./ITNS 280N by selecting the Code 100. The payment of advance tax for the relevant tax year cannot be made after the end of that previous financial year.

1.2 Payment of self-assessment tax

Main article: Self-Assessment

Section 266 requires an assessee to estimate his liability for payment of taxes and make payment of such taxes by way of self-assessment tax. Payment of self-assessment tax is required to be made through Challan No./ITNS 280N by selecting the code 300.

1.3 Payment of tax on the updated return

Main article: Updated return

Where an assessee files an updated return, he shall be liable to pay tax, interest, fee, and additional income-tax in accordance with Section 267.

1.4 Payment of tax on regular assessment

Where an assessee is liable to make payment of taxes in lieu of a notice of demand, such payment is required to be made through Challan No./ITNS 280N by selecting the code 400.

2. Payment of TDS or TCS

2.1 Payment of TDS (Including Demand)

Main article: Deposit of TDS

Every assessee who is liable for deduction of tax at source is required to deposit the amount deducted to the credit of the Central government through Challan No./ITNS 281N. When depositing TDS, the deductor must select code 200 if the payment is made voluntarily. However, if such a payment is made in response to a notice of demand (i.e., in a regular assessment), the assessee needs to select code 400.

However, the tax shall be deposited in Form 141 if the tax is deducted under the following provisions:

(a) TDS under Section 393(1) [Table S. No. 3] from the sum paid to buy an Immovable Property

(b) TDS under Section 393(1) [Table S. No. 2] on rent by a certain Individual or HUF

(c) TDS under Section 393(1) [Table S. No. 6] from payment to contractors or professionals by Certain Individuals or HUFs

(d) TDS under Section 393(1) [Table S. No. 8] on payment for the transfer of Virtual Digital Assets (VDAs)

Where demand has been raised against an assessee for payment of TDS under the above provisions, it shall be paid through a separate facility provided for the payment of demand.

2.2 Tax Collected at Source

Main article: Deposit of TCS

Every assessee who is liable tocollect tax at source is required to deposit the amount collected to the credit of the Central Government through Challan No./ITNS 281N. While making a TCS payment, the collector must select code 200 if the payment is voluntary. However, if such a payment is made in response to a notice of demand (for a regular assessment), the assessee needs to select code 400.

3. Payment of other taxes

3.1 Securities Transaction Tax (STT)

Main article: STT

Every recognised stock exchange that is liable to collect STT is required to deposit the amount collected to the Government through Challan No./ITNS 282N by selecting the code 0034.

3.2 Commodity transaction tax (CTT)

Main article: CTT

Every recognised commodity exchange that is liable to collect CTT is required to deposit the amount collected to the Government through Challan No. /ITNS 282N by selecting the code 800.

Overview

4. Mode of payment

Any taxes that are required to be paid under the Income-tax Act can be paid either Online (electronically) or offline (through an authorised bank).

However, Rule 333 makes it mandatory for a company or a person (other than a company) required to get their accounts audited under Section 63 to pay taxes, interest and penalty only through the online mode.

With a view to facilitating e-payment of taxes, the CBDT clarified that it is not mandatory for an assessee to make tax payments through his own account. He can pay taxes from the account of any other person. However, the challan through which payment is made must clearly indicate the PAN of the assessee on whose behalf payment is made.

This article is general information and not tax advice. Provisions change. Confirm your position with a qualified professional before acting.