What is an Income Tax Challan and How to Pay Tax Online?

Indian tax laws can be complex and challenging. However, understanding the various documents and processes is crucial to ensuring proper compliance and effective tax management. One of the most important direct tax-related documents that you must know about and understand is the income tax challan.

In this article, we are going to delve into what an income tax challan is, the various types you need to be aware of, and how to generate them online.

What is an Income Tax Challan? 

Issued by the Income Tax Department (ITD), an income tax challan is an official document that is used to pay a wide range of direct taxes. The document contains crucial details, such as the assessment year, Permanent Account Number (PAN) of the taxpayer, full name, address, type of tax being paid, amount of tax, and details of the payment mode, among others. 

Any income tax payment that you make, whether it is through the online mode or the offline mode, must always be accompanied by a filled-out income tax challan. Without a valid challan, you cannot make any tax payments.

The primary objective of the income tax challan is to ensure that tax payments are correctly linked to the right taxpayer and for the purpose they intended to. It also helps both the taxpayer and the Income Tax Department to keep track of tax payments and accurately determine unpaid tax obligations.

What are the Different Types of Income Tax Challans?

The Income Tax Department has notified as many as eight different challans for payment of tax for various purposes. Here is a quick overview of the income tax challans and their respective purposes.  

• ITNS-280

The ITNS-280 challan is a general-purpose challan that individuals, companies, and other non-corporate entities can use to pay a wide range of direct taxes. The types of taxes that can be paid using this challan include self-assessment tax, advance tax, surtax, tax on regular assessment, tax on distributed income to unit holders, and tax on distributed profits of domestic companies.   

• ITNS-281

The ITNS-281 challan can be used by companies, individuals, and non-corporate entities to deposit TDS (Tax Deducted at Source) and TCS (Tax Collected at Source).  

• ITNS-282

The ITNS-282 is an income tax challan used to pay the following categories of taxes: Securities Transaction Tax (STT), hotel receipts tax, interest tax, expenditure/other tax, estate duty, wealth tax, and gift tax. 

• ITNS-283

The ITNS-283 income tax challan can be used by banks and other companies to pay banking cash transaction tax and fringe benefits tax.  

• ITNS-284

The ITNS-284 challan can be used by individuals, companies, and other non-corporate entities to pay tax under the Undisclosed Foreign Income and Assets and Imposition of Tax Act, 2015. 

• ITNS-285

The ITNS-285 challan can be used to pay the equalisation levy under the Finance Act, 2016. An equalisation levy is a type of direct tax on online transactions with non-resident service providers. 

• ITNS-286

The ITNS-286 income tax challan can be used by individuals, companies, and non-corporate entities to pay other taxes on income and expenditure and for payments under the income declaration scheme, 2016. 

• ITNS-287

The ITNS-286 challan can be used by individuals, companies, and non-corporate entities to pay other taxes on income and expenditure and for payments under the Pradhan Mantri Garib Kalyan Yojana (PMGKY).  

How to Generate an Income Tax Challan and Pay Tax Online? 

The Income Tax India e-portal enables you to quickly generate an income tax challan and pay tax online. All you need to do is follow the steps outlined below. 

• Step 1: Visit the Income Tax India e-portal and log into your account. 
• Step 2: Under the ‘e-File’ tab on the homepage, click on the ‘e-Pay Tax’ option. 
• Step 3: Click on the ‘New Payment’ option. 
• Step 4: Select the type of tax you wish to pay from the list available on the webpage and click on the ‘Proceed’ option under it. 
• Step 5: Select the assessment year for which you are paying tax. 
• Step 6: Select the type of payment from the drop-down list. 
• Step 7: Click ‘Continue’ to proceed. 
• Step 8: Enter the amount of tax you wish to pay. Depending on the nature of the tax payment, you may be required to fill in other fields like surcharge, cess, interest, and penalty.
• Step 9: Click ‘Continue’ to proceed. 
• Step 10: Choose your payment method. You can opt to pay tax online through net banking, debit card, credit card, UPI, RTGS and NEFT. Alternatively, you can also choose to pay the tax offline via cash, cheque, or demand draft at a bank counter. 
• Step 11: Once you have selected the payment method, click ‘Continue’ to proceed. 
• Step 12: Click ‘Pay Now’ and complete the payment. Alternatively, you can also select the ‘Pay Later’ option. In this case, the generated challan will be saved temporarily. You can retrieve it and make the tax payment later.  

Once the payment is complete, an income tax challan receipt will be generated containing details such as your name, address, PAN, assessment year, type of tax paid, amount of tax paid, challan number, BSR code, date of tax deposit, and payment method information.        

How to Download Income Tax Challans and Pay Tax Offline?  

If you are not well-versed in online tax payment or prefer to pay your tax offline, here are the steps you need to follow. 

• Step 1: Visit this Income Tax Department website link. 
• Step 2: Download the respective income tax challan from the list. 
• Step 3: Print the challan and fill in all of the details in block letters. 
• Step 4: Visit a bank branch and submit the challan along with the tax amount. You can pay tax via cash, cheque, or demand draft. 
• Step 5: The bank officials will provide a signed and sealed acknowledgement slip.

The bank’s acknowledgement slip will contain a 7-digit BSR code, date of deposit, and challan serial number. Since these details will have to be entered on the income tax return at the time of filing, it is advisable to store the acknowledgement slip safely until your return is processed.           

Conclusion

The income tax challan is a very important piece of documentation that serves as a bridge between taxpayers and the Income Tax Department (ITD). Taxpayers can use the challan, along with the challan receipt, as proof of tax payment. The ITD, on the other hand, uses the challan to track tax payments and attribute them to the right taxpayer.   

FAQs