Common Errors In Advance Tax Payment You Need To Know And Avoid

While paying taxes, there are a lot of calculations involved, which can increase the chances of error. By minimising the errors in advance tax payment, you can avoid paying more than needed and any penalties. 

Here is a list of common mistakes when paying advance tax that may lead to miscalculations or interest charges. Know them to create a checklist of precautions when filing your advance tax.  

• Miscalculating Taxable Income - Failing to include all income sources or not considering deductions properly can result in incorrect tax liability

• Not Using the Correct PAN - Using an incorrect PAN while making income tax payments can lead to errors and processing delays. Ensure that the PAN matches the details in your tax filing records.

• Failure to Adjust for Previous Tax Payments - Not considering TDS or previous advance tax payments may lead to over or underpayment

• Ignoring Non-Salary Income - Rental income, interest, dividends, and capital gains must be included to avoid tax shortfalls

• Underestimating Annual Income - Lower income projection may lead to underpayment and penalties. Ensure accurate income estimation.

• Incorrect Application- Applying the wrong slabs or rates can cause incorrect tax payments

• Not Tracking Payment Deadlines - Missing quarterly deadlines results in interest charges and penalties

• Not Verifying Tax Slabs and Rates - Check the latest tax slabs applicable to your income and consult a tax professional if unsure.

• Using Incorrect Tax Payment Form Challan - Choose the correct challan, e.g., Challan 280, for income tax and ensure the right payment mode, online or offline, based on tax type.

Here are some ways to fix common tax errors to avoid penalties and processing delays:

Follow these steps to fix the errors:

1. Contact your jurisdictional assessing officer for corrections in challan details.

2. Find your assessing officer using the ‘Know Your AO’ tab on the e-filing portal.

3. Locate them through Profile Settings> My Profile> PAN Details on the e-filing portal.

4. Submit a formal request along with a copy of the paid challan to correct errors.

For the following errors, banks allow corrections within a specified timeframe:

• Tax amount, PAN, and assessment year – within 7 days from challan deposit date.

• Major head code, minor head code, and nature of payment – within 3 months from the challan deposit date.

Here are the simple steps you need to follow:

1. Fill out a correction request form at the branch where the tax was paid.

2. Submit the original challan counterfoil and a copy of your PAN card.

3. Retain a copy of the acknowledged correction request for records.

While carrying out corrections, keep the following points in mind:

• Banks cannot correct the taxpayer’s name.

• Both minor head and assessment year cannot be corrected simultaneously.

• PAN or TAN correction is allowed only if both records' names match.

• Tax amount correction is permitted only if the final amount matches the original received by the bank.

• You can correct any information only once; subsequent changes are not allowed.

• If any requested information fails correction criteria, the entire request is rejected.

Accurate advance tax calculation ensures timely payments and avoids penalties. You can compute their advance tax liability by following these simple steps:

• Step 1 - Ascertain income from all sources (capital gains, interest, rent, professional income, etc.)

• Step 2 - Calculate gross taxable income, factoring in salary and non-salaried income (advance tax isn't paid on salary)

• Step 3 - Calculate payable tax based on the applicable income tax slab

• Step 4 - Subtract TDS (Tax Deducted at Source) as per relevant tax slabs

• Step 5 - If tax liability after TDS exceeds ₹10,000, ensure to follow advance tax payment norms.

You pay advance tax on time and in the correct amount to avoid penalties. Failure to do so can attract penal interest under sections 234B and 234C, which impose a 1% interest per month.

• Section 234B: Applicable for delays or shortfalls in advance tax payments

• Section 234C: Applicable for non-payment or short payment of individual advance tax instalments

To avoid penalties and ensure accurate payments, consider these key points:

• Estimate Income Early

• Track Tax Liability

• Set Reminders

• Pay in Instalments

• Review TDS

• Consult a Tax Expert

It is crucial to avoid penalties and interest charges. Here are the key dates you must remember.

• First Instalment of Advance Tax: Payment of 15% of the advance tax 

• Second Instalment of Advance Tax: Payment of 45% of the advance tax

• Third Instalment of Advance Tax: Payment of 45% of the advance tax

• Fourth Instalment of Advance Tax

Due for taxpayers with a total tax liability of ₹10,000 or more after TDS/TCS adjustments

• Full Payment of Advance Tax for Presumptive Scheme Assesses

Due for businesses under Sections 44AD/44ADA with turnover under ₹2 crore.

• Furnishing of Form 24G

For government offices that paid TDS/TCS without a challan in February 2025.

What are the most common errors when calculating advance tax?

Here are some of the errors while calculating advance tax:

• Not including all income sources

• Using incorrect tax slabs

• Overlooking applicable deductions

• Forgetting to adjust for TDS

• Miscalculating advance tax instalments

• Missing payment deadlines

How can I avoid mistakes in paying advance tax?

You can avoid mistakes by considering the following points:

• Include all income sources in your calculation

• Verify the correct tax slab for your income

• Account for applicable deductions and rebates

• Keep track of payment deadlines and set reminders

• Double-check payment details and use the correct forms

What are the penalties for incorrect advance tax payments?

If advance tax is not paid in the correct amount, then 1% monthly interest will be charged. Payments must be made in four instalments. Incorrect payments will attract penalties under sections 234B and 234C.

How do I ensure accurate advance tax calculations?

Estimate your total income from all sources from 1st April to 31st March, subtract eligible deductions and exemptions, and apply the applicable tax rates. Regularly review and update estimates to reflect changes in income or deductions.

When are the deadlines for paying advance tax?

The deadlines for paying advance tax are 15th June, 15th September, 15th December, and 15th March. Ensure timely payments to avoid penalties.

Can I claim deductions when paying advance tax?

Yes, you can claim deductions when calculating advance tax. Subtract eligible deductions under Sections 80C, 80D and exemptions from your estimated total income before determining the tax liability.

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