The taxes on income can be finalized only on the completion of the previous year. However, to enable a regular flow of funds and for easing the process of collection of taxes, Income-tax Act has provisions for payment of taxes in advance during the year of earning itself or before completion of previous year. It is also known as Pay as your earn concept.
Taxes are collected by the Government through the following means:
- Voluntary payment by taxpayers into various designated Banks such as Advance tax, Self-Assessment tax, etc.
- Taxes deducted at source
- Taxes collected at source