What is advance tax and why is it paid?

Advance tax is the tax paid on your income throughout the year in installments, rather than paying the full amount at the end of the financial year. It is applicable to individuals who expect their tax liability to exceed ₹10,000 in a financial year. The primary goal is to reduce the burden of a lump-sum tax payment at year-end, ensuring the government receives steady revenue throughout the year.

Who needs to pay advance tax?

Any individual whose tax liability exceeds ₹10,000 in a financial year is required to pay advance tax. This includes salaried individuals who have income from other sources such as business profits, capital gains, or interest income, and self-employed professionals or business owners.

How is the amount of advance tax determined?

The amount of advance tax is based on the estimated income for the financial year. You need to calculate your total income from all sources, including salary, business income, capital gains, interest income, etc., and then apply the applicable tax rates to estimate the tax liability. After that, you pay the tax in installments as per the schedule set by the Income Tax Department.

What happens if I don’t pay advance tax on time?

If you miss the deadlines for advance tax payments, you will be charged interest under Section 234B (interest for default in payment of advance tax) and Section 234C (interest for deferment of advance tax). It is crucial to make the payment on time to avoid these penalties.

Can I pay advance tax if my income is not fixed?

Yes, even if your income is not fixed and fluctuates during the year, you can still pay advance tax. You can revise your advance tax payments if your estimated income changes mid-year. If your income increases, you will need to pay additional advance tax to avoid interest charges.

How do I calculate excess advance tax paid?

To calculate excess advance tax paid, compare the total advance tax you have already paid during the year with your final tax liability (after applying the appropriate tax slabs and accounting for any TDS/TCS). If the advance tax exceeds your actual liability, the difference is the excess tax paid.

Can I adjust excess advance tax paid against future liabilities?

No, excess advance tax cannot be carried forward to the next financial year. However, you can claim a refund for the excess paid by filing your ITR for the current year. The refund will be processed by the Income Tax Department after verifying the return.

How do I claim a refund for excess advance tax paid?

To claim a refund for excess advance tax paid, you need to file your Income Tax Return (ITR) and include the details of your advance tax payments. The refund will be processed after the Income Tax Department processes your return. You can track the status of your refund through the e-filing portal.

What should I do if I have made an error while paying advance tax?

If there is an error in the advance tax payment, you can request a challan correction on the Income Tax e-filing portal. Depending on the error type, you may be able to make corrections within 7 to 30 days of the original payment date. If there are discrepancies in your return, you can also file a rectification request.

Can I claim excess advance tax paid if I switch between tax regimes?

Yes, you can claim the excess advance tax paid when filing your ITR, regardless of whether you switch between the old and new tax regimes. The key is to ensure that all the tax details, including advance tax, are correctly reported in your return.

What are the deadlines for paying advance tax?

Advance tax payments are made in four installments during the financial year: 15th June: 15% of the estimated tax 15th September: 45% of the estimated tax (cumulative) 15th December: 75% of the estimated tax (cumulative) 15th March: 100% of the estimated tax (cumulative)

What should I do if I have overpaid advance tax but did not file my ITR on time?

If you have overpaid advance tax but haven’t filed your ITR on time, you should still file your ITR as soon as possible. The excess tax paid will be considered when processing your return, and you can claim a refund. However, you may be charged penalties or interest for late filing of the return.

How to Adjust Excess Advance Tax Paid While Filing ITR?

Asharam Swain

1 day ago7 min read

Sometimes, taxpayers end up paying more advance tax than needed due to changes in income or calculation mistakes. If this happens, the excess tax paid can be claimed as a refund when filing your Income Tax Return (ITR).

By following the right steps, you can ensure a seamless adjustment of the excess payment, helping you get the refund promptly and file your taxes correctly. Understanding the process of adjusting excess advance tax payment is crucial while filing your ITR.

Table of Content

Understanding Advance Tax

Steps to Adjust Excess Advance Tax

Additional Tips To Adjust Excess Advance Tax Paid While Filing ITR?

How to Adjust Excess Advance Tax Paid While Filing ITR: General Questions

Conclusion Most Asked Questions

Understanding Advance Tax

Advance tax is a payment made during the financial year based on estimated income. Paid in four installments, it helps spread the tax burden across the year, preventing a lump sum payment at year-end.

This payment is required for individuals and businesses whose tax liability exceeds ₹10,000. However, if income estimates change or if there are errors, more advance tax than necessary may be paid. Any excess amount can be adjusted and refunded during the ITR filing process.

Steps to Adjust Excess Advance Tax

Calculate Total Tax Liability

Start by calculating your total tax liability for the year. Estimate income from all sources, such as salary, capital gains, and business income. Apply the appropriate tax slabs to determine your total tax liability. After calculating the tax payable, subtract any TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) from the total amount.

Determine Excess Payment

Compare the advance tax paid with your actual tax liability. If the advance tax paid exceeds the calculated tax liability, the difference represents the excess tax. This excess can be claimed as a refund during ITR filing.

Ensure all advance tax payments are accurately reflected in the return.

File Your ITR

Select the correct ITR form based on the type of income (e.g., ITR-1 for salaried individuals). Fill in the necessary details, including total income, TDS/TCS, and advance tax paid. Accurately reflecting the excess advance tax ensures the refund claim is processed.

Verify Your Return

After filing the ITR, proceed to verify the return. Verification can be done electronically using options like Aadhaar OTP, Net Banking, or by sending a signed physical copy to the Income Tax Department.

Verification must be completed within 120 days of filing for the return to be considered valid.

Refund Process

Once the return is verified, the Income Tax Department will process the return and initiate a refund for the excess advance tax. The refund will be credited directly to the bank account provided in the return. Processing time may vary depending on the department's timeline.

Additional Tips To Adjust Excess Advance Tax Paid While Filing ITR?

Challan Correction

If you find that there are errors in your advance tax challan, don't worry, corrections can be made within specified time limits. The Income Tax Department offers a challan correction feature that allows taxpayers to correct mistakes in their advance tax payments. Here’s how you can do it:

Minor Errors: If the error is related to assessment year or minor head, it can be corrected within 7 days from the date of submission.
Major Errors: If the error concerns major details like the amount or payment mode, you have up to 30 days to correct the challan.

Make sure to use the e-filing portal for the correction process and follow the instructions carefully to ensure the correction is accepted.

Rectification Request

If you discover discrepancies after filing your return, such as an error in the processing of your advance tax payments, you can submit a rectification request to the Centralized Processing Centre (CPC). This process allows you to correct issues like:

Incorrectly calculated tax liability.
Missing advance tax payments or errors in the payment details.

You can initiate the rectification process through the e-filing portal, where you'll need to select the Rectification Request option. Ensure you provide accurate information and supporting documents to avoid further delays in the rectification.

How to Adjust Excess Advance Tax Paid While Filing ITR: General Questions

What happens if I overpay advance tax?

If you overpay advance tax, the excess amount will be refunded by the Income Tax Department. When filing your ITR, you can claim the overpaid advance tax as a refund. This refund will be processed after your ITR is successfully filed and verified.

How do I correct errors in my advance tax challan?

To correct errors in your advance tax challan, you can use the challan correction feature on the Income Tax Department’s e-filing portal. Depending on the type of error, you can make corrections within 7 to 30 days of the original payment. Ensure that you provide the correct details when submitting the correction request.

Can I adjust my advance tax payments during the year if my income changes?

Yes, you can adjust your advance tax payments based on changes in your income during the year. If you realize that your estimated income is higher or lower than expected, you can revise your advance tax payments accordingly. The Income Tax Department allows you to revise and make adjustments to your payments, preventing overpayment or underpayment of taxes.

How to file ITR with excess advance tax?

To file your ITR with excess advance tax:

Calculate your total tax liability by estimating your income and applying the applicable tax slabs.
Subtract any TDS from your total tax liability to get the net tax payable.
Compare the advance tax paid with your net tax liability. If the advance tax exceeds your liability, you can claim the excess as a refund.
Fill out the appropriate ITR form (e.g., ITR-1 for salaried individuals).
Ensure you accurately enter all income, TDS, and advance tax details in the return.
File the return and claim the excess advance tax as a refund.

What if I need to correct my advance tax challan?

If you need to correct your advance tax challan, follow these steps:

Log in to the Income Tax e-filing portal.
Navigate to the challan correction section.
Choose the type of correction required—minor or major—and follow the instructions based on the timeframe (7 days for minor, 30 days for major errors).
Provide the correct details and submit the request.
Once corrected, the advance tax details will be updated in your ITR, allowing for proper filing and adjustment.

Conclusion

Adjusting excess advance tax while filing your ITR is a straightforward process, as long as you carefully follow the steps involved. By calculating your total tax liability, determining any excess payment, and accurately filling out the ITR, you can claim a refund and resolve any discrepancies. Make sure to take advantage of features like challan correction and rectification requests if errors occur in your filings. Ultimately, maintaining accurate records and filing promptly ensures a smooth tax experience.

By following these steps, you can avoid complications and ensure that your tax filing process is as efficient as possible.

FAQs

What is advance tax and why is it paid?
Advance tax is the tax paid on your income throughout the year in installments, rather than paying the full amount at the end of the financial year. It is applicable to individuals who expect their tax liability to exceed ₹10,000 in a financial year. The primary goal is to reduce the burden of a lump-sum tax payment at year-end, ensuring the government receives steady revenue throughout the year.
Who needs to pay advance tax?
Any individual whose tax liability exceeds ₹10,000 in a financial year is required to pay advance tax. This includes salaried individuals who have income from other sources such as business profits, capital gains, or interest income, and self-employed professionals or business owners.
How is the amount of advance tax determined?
The amount of advance tax is based on the estimated income for the financial year. You need to calculate your total income from all sources, including salary, business income, capital gains, interest income, etc., and then apply the applicable tax rates to estimate the tax liability. After that, you pay the tax in installments as per the schedule set by the Income Tax Department.
What happens if I don’t pay advance tax on time?
If you miss the deadlines for advance tax payments, you will be charged interest under Section 234B (interest for default in payment of advance tax) and Section 234C (interest for deferment of advance tax). It is crucial to make the payment on time to avoid these penalties.
Can I pay advance tax if my income is not fixed?
Yes, even if your income is not fixed and fluctuates during the year, you can still pay advance tax. You can revise your advance tax payments if your estimated income changes mid-year. If your income increases, you will need to pay additional advance tax to avoid interest charges.
How do I calculate excess advance tax paid?
To calculate excess advance tax paid, compare the total advance tax you have already paid during the year with your final tax liability (after applying the appropriate tax slabs and accounting for any TDS/TCS). If the advance tax exceeds your actual liability, the difference is the excess tax paid.
Can I adjust excess advance tax paid against future liabilities?
No, excess advance tax cannot be carried forward to the next financial year. However, you can claim a refund for the excess paid by filing your ITR for the current year. The refund will be processed by the Income Tax Department after verifying the return.
How do I claim a refund for excess advance tax paid?
To claim a refund for excess advance tax paid, you need to file your Income Tax Return (ITR) and include the details of your advance tax payments. The refund will be processed after the Income Tax Department processes your return. You can track the status of your refund through the e-filing portal.
What should I do if I have made an error while paying advance tax?
If there is an error in the advance tax payment, you can request a challan correction on the Income Tax e-filing portal. Depending on the error type, you may be able to make corrections within 7 to 30 days of the original payment date. If there are discrepancies in your return, you can also file a rectification request.
Can I claim excess advance tax paid if I switch between tax regimes?
Yes, you can claim the excess advance tax paid when filing your ITR, regardless of whether you switch between the old and new tax regimes. The key is to ensure that all the tax details, including advance tax, are correctly reported in your return.
What are the deadlines for paying advance tax?
Advance tax payments are made in four installments during the financial year:
- 15th June: 15% of the estimated tax
- 15th September: 45% of the estimated tax (cumulative)
- 15th December: 75% of the estimated tax (cumulative)
- 15th March: 100% of the estimated tax (cumulative)
What should I do if I have overpaid advance tax but did not file my ITR on time?
If you have overpaid advance tax but haven’t filed your ITR on time, you should still file your ITR as soon as possible. The excess tax paid will be considered when processing your return, and you can claim a refund. However, you may be charged penalties or interest for late filing of the return.

File Your ITR now