How to pay Tax on Income
How does the Government collect Income Tax?
Taxes are collected by three means:
a) voluntary payment by persons into various designated Banks.
For example Advance Tax and Self Assessment Tax
b) Taxes deducted at source [TDS] on your behalf from the
payments receivable by you.
c) Taxes collected at source [TCS] on your behalf at the time of
It is the constitutional obligation of every person earning
income to compute his income and pay taxes correctly.
How will I know how much Income tax I have to pay?
The rates of income tax and corporate taxes are
available in the Finance bill [commonly called budget] passed by
Parliament every year.
Does every person have to keenly follow the annual
You need not do so. You can take professional help or the help of
Public Relation Officer [PRO] in the local Income Tax Department
office. You may also take assistance from Tax Return Preparers
When do I have to pay the taxes on my income?
Generally the tax on income crystallizes only on
completion of the previous year. However for ease of collection
and regularity of flow of funds to the Government for its various
activities, the Income tax Act has laid down payment of taxes in
advance during the year of earning itself. Taxes may also be
collected on your behalf during the previous year itself through
TDS and TCS. If at the time of filing of return you find that you
have some balance tax to be paid after taking into account your
advance tax, TDS & TCS, the short fall is to be deposited as
Self Assessment Tax.
What is the procedure for depositing tax?
A form called Challan available in the Income Tax
department, in banks and on the IT department web site should be
filled up and deposited in the bank along with the money. Taxes
can also be paid on-line.
In the challan there are terms like Income tax on
companies & Income tax other than companies. What do they
The tax to be paid by the companies on their income is called
corporate tax and in the challan it is mentioned as Income tax on
Companies. Tax paid by non-corporates is called Income tax and in
the challan it is identified as Income tax other than
The deposit of advance tax is made through challan by ticking the
It is paid in installments. The amount payable is
to be calculated in the following manner:
What is regular tax and how is it paid?
Under the Income tax Act every person has the responsibility to
correctly compute and pay his due taxes. Where the Department
finds that there has been understatement of income and tax due,
it takes measures to compute the actual tax amount that ought to
have been paid. This demand raised on the person is called
Regular Tax. The regular tax has to be paid within 30 days of
receipt of the notice of demand.
What are the precautions that I should take while filling up the
tax payment challan?
i. Head of payment eg. Corporation Tax/Income
ii. Amount and mode of payment of tax
iii. Type of payment [Advance tax/Self
assessment/Regular/Tax on Dividend]
iv. Assessment year
v. The unique identification number called PAN
[Permanent Account Number] allotted by the IT Department.
Do I need to insist on some proof of payment from the Banker to
whom I have submitted the challan?
The filled up taxpayers counter foil will be stamped and returned
to you by the bank. Please ensure that the bank stamp contains
BSR[Bankers Serial number code], Challan Identification Number
[CIN], and the date of payment.
How can I know that the Government has received the
amount deposited by me as taxes in the bank?
The NSDL website [http://www.tin-nsdl.com] provides online
services called Challan Status Enquiry. You can also see your tax
pass book, an online tax credit viewing facility in the same
What is the procedure to be followed to view my Tax
You must first register your PAN by logging into
the online service called view tax credit in the NSDL website
[http://www.tin-nsdl.com]. Thereafter your PAN registration must
be authorized by visiting the nearest TIN [Tax Information
Network] facilitation center of NSDL or getting their
representative to call upon you. These are paid services.
What should I do if my tax payment particulars are
not found against my name in Income Tax website?
For payments deposited by you into the bank you
will have to contact your bankers if the credit has not been
given even after three days. In case of TDS or TCS you will have
to contact the concerned deductor /collector after the due date
for filing the quarterly TDS/TCS return by them is over.
Is my responsibility under the Income tax Act over
once taxes are paid?
No. You are thereafter responsible for ensuring that the tax
credits are available in your tax passbook, TDS/TCS certificates
are received by you and that full particulars of income and tax
payment along with necessary proof is submitted to the income tax
department in the form of Return before the due date.