E-Payment of Direct Taxes: Simplifying Tax Payments

The introduction to e-payment of direct taxes in India encapsulates the modernization of tax payment processes. In the past, taxpayers had to endure long queues and paperwork when settling their tax dues. However, with technological advancements and the government’s commitment to streamlining procedures, e-payment has emerged as a more convenient alternative. This method allows individuals and businesses to fulfill their tax obligations from the comfort of their own homes. In this comprehensive guide, we explore the mandatory and optional aspects of e-payment, its benefits, necessary requirements, and step-by-step instructions, making tax payments a hassle-free endeavor. Whether you’re a company, a taxpayer subject to audit, or simply seeking a more straightforward tax payment experience, e-payment provides a solution that saves time and effort.

E-PAYMENT OF DIRECT TAXES

There are two modes of payment of direct taxes (i) physical mode i.e. payment by furnishing the hard copy of the challan at the designated bank; and (ii) e-payment mode i.e. making payment by using the electronic mode. In this part, you can gain knowledge about various provisions relating to e-payment of various direct taxes.

Introduction

Earlier, we used to stand in queue for hours to book movie tickets, railway tickets, etc. but now we can relax at our place and perform these tasks using the internet. With the development of technology, the Government has also upgraded itself. Previously, the taxpayers have to wait in long queues at the banks for making the payment of tax, but after the introduction of e-payment facility one can pay tax quite comfortably from any place by using various online payment mode

Mandatory or compulsory e-payment

It is compulsory for the following taxpayers to pay tax using the e-payment mode only. In other words, following persons cannot use the physical mode of payment of tax and have to pay the tax electronically using the e- payment facility:

1) All companies

2) All taxpayers other than company who are liable to get their accounts audited as per section 44AB.

Illustration

The income-tax liability for the financial year 2023-24 of Essem Ltd. amounted to Rs. 8,40,000. It wants to discharge its tax liability. Advice the company as to the mode of payment of tax.

**

It is compulsory for a company to pay the income-tax using the e-payment mode only. Hence, Essem Ltd. has to pay its tax electronically by using various prescribed online mode of payment.

Illustration

Mr. Raja is engaged in the business of trading in food grains. The annual turnover of the business was Rs. 2,84,00,000. He wants to pay advance tax of Rs. 1,84,000. Advice him as to the mode of payment of tax.

**

The turnover of the business of Mr. Raja exceeds Rs. 1,00,00,000 and, hence, as per section 44AB Mr. Raja will be liable to get the accounts audited.

It is compulsory for the following taxpayers to pay tax using the e-payment mode only. In other words, following persons cannot use the physical mode of payment of tax and have to pay the tax electronically using the e- payment facility:

(1) All companies

(2) All taxpayers other than company who are liable to get their accounts audited as per section 44AB.

Mr. Raja is liable to get his accounts audited and, hence, he will be covered by (2) above, and hence he has to pay the advance tax electronically.

Illustration

Mr. Vipul is engaged in the business of trading in fabrics. The annual turnover of the business amounted to Rs. 84,00,000. Profit for the year amounted to Rs. 8,40,000. He wants to pay his advance tax. Advice him as to the mode of payment of tax.

**

The turnover of the business does not exceed Rs. 1,00,00,000 and, hence, as per section 44AB Mr. Vipul is not liable to get the accounts audited.

It is compulsory for the following taxpayers to pay tax using the e-payment mode only. In other words, following persons cannot use the physical mode of payment of tax and have to pay the tax electronically using the e- payment facility:

(1) All companies

(2) All taxpayers other than company who are liable to get their accounts audited as per section 44AB.

Mr. Vipul is not covered in any of the above discussed categories and, hence, it is not mandatory for him to pay tax electronically. Thus, he can pay tax by physical mode or electronic mode as per his choice. However, e-payment will be easy and will save time and efforts.

Illustration

Essem Ltd. paid brokerage of Rs. 84,000 to Mr. Kapoor. The company deducted tax of Rs. 4,200 on the brokerage paid to Mr. Kapoor. It wants to pay the TDS of Rs. 4,200 to the credit of Government. Advice the company as to the mode of payment of TDS to the credit of the Government.

**

It is compulsory for the following taxpayers to pay tax using the e-payment mode only. In other words, following persons cannot use the physical mode of payment of tax and have to pay the tax electronically using the e- payment facility:

(1) All companies

(2) All taxpayers other than company who are liable to get their accounts audited as per section 44AB.

The above provisions will apply to all forms of tax like advance tax, self assessment tax, tax deducted at source, etc. Hence, Essem Ltd. has to pay electronically the TDS to the credit of Government.

Illustration

Mr. Krunal is engaged in the business of trading in food grains. The annual turnover of the business was Rs. 2,84,00,000. He purchased 1,000 quintals of wheat through a broker and paid him brokerage of Rs. 84,000. Mr. Krunal deducted tax of Rs. 8,400 on the brokerage paid by him. He wants to pay the TDS of Rs. 8,400 to the credit of Government. Advice him as to the mode of payment of TDS to the credit of the Government.

**

The turnover of the business exceeds Rs. 1,00,00,000 and, hence, as per section 44AB Mr. Krunal will be liable to get the accounts audited.

It is compulsory for the following taxpayers to pay tax using the e-payment mode only. In other words, following persons cannot use the physical mode of payment of tax and have to pay the tax electronically using the e- payment facility:

(1) All companies

(2) All taxpayers other than company who are liable to get their accounts audited as per section 44AB.

The above provisions will apply to all forms of taxes like advance tax, self assessment tax, tax deducted at source, etc. Hence, Mr. Krunal has to pay electronically the TDS to the credit of the Government.

Optional e-payment

As discussed earlier, e-payment is mandatory for all companies and all non-corporate taxpayers covered by audit under section 44AB. A person not covered in the mandatory category can voluntarily pay his tax by using the e-payment mode. E-payment saves time and efforts.

Benefits of e-payment

E-payment is time saving, simple, safe and this facility can be used at any time from anywhere.

Requirements for making e-payment

Tax can be paid online using any of the following payment mode:

a) Net Banking

b) Debit Card

c) Credit Card

d) RTGS/NEFT

e) UPI

If the taxpayer does not have any of the above mentioned facility, he can make e-payment using account of any other person but the tax should be paid in his name.

If the payment is to be made through a credit card, you need to select the ‘Payment Gateway’ mode option. In such a case, the transaction charges of 0.85% + GST @ 18% shall apply. These transaction charges will be applicable over and above the tax amount in this mode.

Taxes which can be paid electronically

Following direct taxes can be paid using the e-payment mode:

(1) Income-tax

(2) Equalization Levy

(3) Corporate tax (i.e., income-tax paid by a company)

(4) Tax deducted at source (TDS)

(5) Tax collected at source (TCS)

(6) Securities Transaction Tax (STT)

(7) Commodities Transaction Tax (CTT)

(8) Wealth-tax and other direct taxes like gift tax, expenditure tax, etc.

Nature of challan to be used

Following are the Challans to be used for making payment of different direct taxes:

Challan No.	Nature of tax payment
ITNS 280	For making payment of income-tax and Corporate tax (i.e. income-tax by companies)
ITNS 281	For making payment of TDS/TCS by corporate and non-corporate deductors/collectors
ITNS 282	For making payment of Securities Transaction Tax, Wealth Tax and other direct taxes.
ITNS 284	For making payment of income-tax and corporate tax (i.e. income-tax by companies) in case of undisclosed foreign Income and Assets.
ITNS 285	For making payment of Equalization levy
Form No. 26QB	For making payment of tax deducted at source in case of immovable property.
Form No. 26QC	For making payment of tax deducted at source in case of rent of property
Form No. 26QD	For making payment of tax deducted at source in case of resident contractors and professionals

General details to be provided in the Challans to be used for making payment of tax

Following are few significant details which are common to all the above discussed challans:

Correct Permanent Account Number of the taxpayer should be entered in case of payment of income-tax and correct Tax Deduction Account Number of the deductor should be entered in case of payment of TDS/TCS.

Correct financial year/assessment year should be selected.

Correct address of the taxpayer is to be provided along with correct Pin Code. Correct e-mail ID and correct phone number of the taxpayer should be provided.

How to e-pay tax?

Given below is the step to make e-payment of taxes:

(a) Go to https://www.incometax.gov.in/iec/foportal/

(b) Select ‘e-Pay Tax’ from the quick links

(c) Enter PAN/TAN and mobile number for OTP verification

(d) Enter the OTP received on mobile number and click on continue

(e) Confirm the details of ‘PAN/TAN’ and ‘Name’ and click on continue

(f) Select the appropriate payment, i.e., ‘Income Tax’, ‘Equalisation Levy/ STT/ CTT’ or ‘Fee/ Other Payments’ and click on proceed

(g) Select ‘Assessment Year’ and ‘Type of Payment’ and click on continue

(h) Enter amount of tax, surcharge, cess, etc. (if any)

(i) On click on continue, taxpayer will have a new screen with various option to make payment, like net banking, debit card, Pay at bank counter, RTGS/NEF and payment gateway.

(j) Select appropriate mode of payment and click on continue. If taxpayer wishes to make payment using credit card or UPI, he needs to select ‘Payment Gateway’.

(k) Verify all the details appearing on challan and pay tax.

(l) On successful completion of the transaction, the challan of payment (i.e., receipt of payment) will be generated and will be displayed on the screen.

Contact details in case of any assistance

While making e-payment, if the taxpayer faces any problem, he should contact the call center.

While making e-payment, if the taxpayer faces any problem at the payment gateway of 3his bank, he should contact his bank.

Important Points on E-PAYMENT OF DIRECT TAXES

1. With the development of technology, the Government has also upgraded itself, thus, as on today, there are two modes of payment of direct taxes (i) physical mode i.e. payment by furnishing the hard copy of the challan at the designated bank; and (ii) e-payment mode. Thus, option (a) is the correct option.

2. It is compulsory for the following taxpayers to pay tax using the e-payment mode only:

• All companies
• All taxpayers other than company who are liable to get their accounts audited as per section 44AB.

Thus, the statement given in the question is true and hence, option (a) is the correct option.

3. A person not covered in the mandatory category can voluntarily pay his tax using the e-payment mode.

4. Credit card can be used for making tax payments. If the payment is to be made through a credit card, you need to select the ‘Payment Gateway’ mode option. In such a case, the transaction charges of 0.85% + GST @ 18% shall apply.

5. If the taxpayer does not have a net banking enabled account, then he can make e- payment using a net banking enabled account of any other person.

6. The facility of e-payment of tax is available in case of income-tax and other direct taxes like wealth tax, securities transaction tax, etc. Following direct taxes can be paid using the e-payment mode :

(1) Income-tax

(2) Corporate tax (e., income-tax paid by a company)

(3) Tax deducted at source (TDS)

(4) Tax collected at source (TCS)

(5) Securities Transaction Tax (STT)

(6) Commodities Transaction Tax (CTT)

(7) Wealth-tax and other direct taxes like gift tax, expenditure tax, etc

Thus, the statement given in the question is false and hence, option (b) is the correct option.

7. ITNS 280 challan is to be used for making payment of income-tax and Corporate tax (e. income-tax by companies).

8. ITNS 281 challan is to be used for making payment of TDS/TCS by corporate and non-corporate deductors/collectors.

9. ITNS 282 challan is to be used for making payment of Securities Transaction Tax, Wealth Tax and other direct taxes.

10. Form No. 26QB challan is to be used for making payment of tax deducted at source in case of immovable property.

Q11. ITNS 284  challan is to be used for making payment of income-tax in case of undisclosed foreign income.