How an NRI Actually Pays Tax Due to India: Self-Assessment Tax, Challan 280 on the e-Pay-Tax Portal, and the 234B/234C Interest Trap

A reader in Toronto filed his Indian return on time, paid the Rs 2,40,000 he owed with his Canadian credit card through the portal, and assumed he was done. Three weeks later the return was processed with a demand for the full Rs 2,40,000 plus interest. The money had left his card, the bank had charged him a foreign transaction fee on top, and yet the income tax system showed nothing paid against his return. He had selected minor head 400 instead of 300, and entered assessment year 2025-26 instead of 2026-27. The cash was sitting in the government's account under the wrong labels, invisible to his ITR. Untangling it took two correction requests and six weeks. The tax was never the hard part. Paying it correctly, from abroad, was.

The 30-second answer: An NRI pays the balance tax due on a return as self-assessment tax under Section 140A (Section 423 of the Income-tax Act, 2025), using the e-Pay-Tax facility on the income tax portal, which has replaced the old standalone Challan 280 (ITNS 280). Select minor head 300 and the correct assessment year, then pay by net banking, UPI, or the Payment Gateway mode that accepts foreign credit and debit cards through six partner banks. No Indian bank account is strictly required; a foreign card or a payment made by a resident against your PAN both work, because the challan attaches to the PAN. If your advance tax fell short, expect 234B and 234C interest at 1% per month. After paying, confirm the challan lands in Form 26AS and the AIS before you file, or risk the tax-paid-but-not-credited mismatch.

This guide assumes you already know whether you owe Indian tax at all and how your residency was determined; if not, start with the ITR filing guide for NRIs and the advance tax guide. What follows is the mechanical part that nobody explains properly: how to actually move the money from a foreign account into the right slot in the Indian tax system, how to pay when your Indian bank net banking does not work or you have no Indian account at all, how the interest is computed when you are short, and how to make sure the rupees you sent get credited against your return rather than vanishing into a mislabelled challan.

Self-assessment tax is the gap the system expects you to close yourself

Before you can file an Indian return, the tax shown as payable on it must already be paid. That final balance, after subtracting TDS already deducted and any advance tax you paid during the year, is self-assessment tax under Section 140A (carried forward as Section 423 in the Income-tax Act, 2025 that replaces the 1961 Act). The name is literal: you assess your own liability, you pay the shortfall, and only then does the portal let you submit a valid return. File without paying it and the return is treated as defective.

For an NRI this gap is usually larger than for a resident, and for a reason specific to your status. TDS on NRI income is deducted at flat rates under Section 195, often higher than your true slab liability, but it is also deducted on income streams that residents settle through advance tax. The mismatch cuts both ways. On rent and interest your TDS may overshoot, producing a refund. On capital gains where the buyer under-deducted, or on income with no TDS at all such as a foreign-sourced item that is still taxable in India, you are left with a balance to pay yourself. The self-assessment payment is where these net out.

The crucial sequencing point: self-assessment tax is paid after the financial year ends and before you file, under minor head 300. It is distinct from advance tax (minor head 100), which is paid in four instalments during the year itself. If you discover in June 2026, while preparing the return for the year ended 31 March 2026, that you owe another Rs 1,80,000, that is self-assessment tax for assessment year 2026-27, paid under head 300. Get either the head or the year wrong and the money will not attach to the return you are about to file. That single misclassification is the source of most "I paid but it shows unpaid" panics.

Challan 280 still exists, but you use it through e-Pay-Tax now

If you last paid Indian tax a few years ago, you remember the NSDL (now Protean) page where you filled out Challan 280, also called ITNS 280, and got bounced to your bank's net banking. That standalone route has been retired. Direct tax payments have migrated to the e-Pay-Tax facility inside the e-filing portal at incometax.gov.in. The challan is conceptually the same document, the same minor heads, the same major head 0021 for income tax other than companies, but you now generate it on the portal rather than on the old NSDL site.

The practical implication for an NRI is that you no longer need to start from your bank. You start from the tax portal, build the challan there with your PAN, the assessment year, and the minor head, and only at the final step choose how to pay. This matters enormously for someone abroad, because it opens up the Payment Gateway mode that the old bank-first flow did not surface as prominently. The challan, once generated, carries a Challan Reference Number (CRN) and stays valid for a window during which you can pay it, so you can build it now and pay it minutes later through whichever channel actually accepts your foreign card.

There are two ways into e-Pay-Tax. The first is pre-login, from the portal homepage under Quick Links, where you enter your PAN, verify a mobile number with an OTP, and proceed. The catch is that the OTP goes to the mobile number registered, which for many NRIs is an old Indian number they no longer carry. The cleaner route is post-login: log into your e-filing account with your PAN and password, go to e-File then e-Pay-Tax, and create the challan from inside your account, where your details are pre-filled and you authenticate through the portal rather than an Indian SMS. For anyone living abroad, log in first. It removes the single most common point of failure, the OTP you never receive.

Paying from abroad when you have no Indian net banking, or no Indian account

This is the question that sends NRIs in circles, so here is the full menu, ranked by how reliably it works from outside India.

The e-Pay-Tax system offers five payment modes: net banking, debit card, pay-at-bank-counter, RTGS/NEFT, and Payment Gateway. For an NRI sitting in London or Dubai, three of those are realistically usable and two are usually not.

Net banking works only if you hold an account with one of the authorised banks and your net banking is active and able to transact from abroad. Many NRIs bank with HDFC, ICICI, SBI or Axis through an NRO account, and the NRO account's net banking can pay tax directly. This is the cleanest path when it is available, because there are no transaction charges and the credit is fast. The friction is that some banks restrict net banking logins from foreign IP addresses or require an OTP to an Indian number, the same OTP problem in a different place. If your NRO net banking logs in and transacts from abroad, use it and stop reading this section.

The Payment Gateway mode is the one built for people in your position. At the final step you choose Payment Gateway, and the gateway accepts credit card, debit card, UPI and net banking routed through six partner banks: Canara Bank, Federal Bank, HDFC Bank, Kotak Mahindra Bank, Bank of Maharashtra and State Bank of India. A foreign-issued Visa or Mastercard credit card usually goes through here. This is how an NRI with no Indian bank account at all can still pay Indian tax, with a card issued in Canada or the UAE. Two warnings. First, transaction charges apply over and above the tax for credit cards and most gateway routes, levied by the payment aggregator, and your foreign card issuer will often add its own cross-border and foreign-exchange fee on top, so a Rs 2,40,000 payment can cost a few thousand rupees extra all in. Second, foreign cards are sometimes declined by the gateway's fraud screening even when the card is perfectly valid, with no useful error message. If that happens, do not retry five times and create five pending challans; switch channels.

UPI is theoretically available through the gateway and carries no charge when paid via BHIM-UPI or a RuPay-on-UPI route, but it requires a UPI ID linked to an Indian bank account, which most NRIs do not have unless they run UPI off an NRO account. If you have it, it is the cheapest digital option.

That leaves the two fallbacks. RTGS/NEFT generates a mandate form that you take to any bank to push the money; it is awkward from abroad and rarely the right tool for an individual. Pay-at-bank-counter needs you to be physically at a branch. Neither suits a remote NRI on a deadline.

The route that quietly solves more cases than any of the above: have a trusted person in India pay on your behalf. Because the challan attaches to the PAN entered on it, not to the card or account that funded it, your brother or your CA in India can log into the portal, create a challan against your PAN with your assessment year and minor head 300, and pay it from their own Indian account or UPI. The credit shows up in your Form 26AS and AIS, against your PAN, exactly as if you had paid it. There is nothing irregular about this; the tax is yours, the PAN is yours, the money simply came through someone else's account. For an NRI whose foreign card keeps getting declined, this is often the fastest clean fix. The only discipline required is to verify, before they hit pay, that the PAN, assessment year and minor head on their screen are yours and correct, because a payment made under their guidance against the wrong year is harder to unwind than one you never made.

Put that in practice with a concrete sequence. Say you owe Rs 1,80,000 of self-assessment tax for assessment year 2026-27 and your Canadian credit card was declined twice on the gateway. You log into the portal, generate the challan against your PAN, minor head 300, assessment year 2026-27, amount Rs 1,80,000, and note the CRN. You send the CRN and a screenshot to your brother in Pune. He opens the same challan from the portal using your PAN at the pre-login screen, or you complete it through your own login and hand him only the final payment step, and he pays Rs 1,80,000 by UPI from his HDFC account, paying zero in charges. Within a week the Rs 1,80,000 appears in your 26AS under your PAN. You file. The card declines never mattered.

When your advance tax fell short: how 234B and 234C actually bite

Self-assessment tax closes the gap, but if that gap exists because you under-paid advance tax during the year, you also owe interest, and NRIs underpay advance tax more often than residents because so much of their income arrives with no TDS or with TDS deducted late. There are two interest sections and they stack.

Section 234C is the instalment interest. Advance tax is due in four instalments, and by 15 June, 15 September, 15 December and 15 March you are expected to have paid at least 15%, 45%, 75% and 100% of your total advance tax for the year. Miss any of those cumulative thresholds and 234C charges 1% per month on that instalment's shortfall, for three months for the first three instalments and one month for the March instalment. It is a penalty for paying late within the year, even if you square up by 31 March.

Section 234B is the bigger-picture interest. If your total advance tax paid during the year is less than 90% of the assessed tax, 234B charges 1% per month on the shortfall from 1 April of the assessment year until the date you actually pay, whether through self-assessment tax or otherwise. So the longer you wait after the year ends to pay your self-assessment balance, the more 234B accrues. This is the section that punishes an NRI who files in November instead of July: every extra month is another 1%.

Two mechanical rules decide the exact figure, and both round against you. The shortfall base is rounded down to the nearest Rs 100 before interest is applied. And any part of a month counts as a full month, so paying on 2 May costs the same one month's interest as paying on 31 May. The honest implication is that there is no reward for paying mid-month; pay at the start of a month or wait, because the calendar rounds up either way.

Walk through a full example, because the interaction of the two sections is where people lose the thread. Take Arjun, an NRI in Dubai, whose Indian income for the year ended 31 March 2026 produces an assessed tax of Rs 5,00,000 after TDS credit. He paid no advance tax during the year, assuming his TDS covered him, and he pays the whole Rs 5,00,000 as self-assessment tax on 15 July 2026, just before filing.

His TDS, say, was Rs 1,00,000, so advance tax that should have been paid was effectively the rest. To keep the arithmetic clean, treat the Rs 5,00,000 as the advance tax shortfall he carried into the assessment year. He paid zero of the 15%, 45%, 75% and 100% instalments, so 234C charges 1% per month on each cumulative shortfall: roughly 1% on 15% for three months, on the increment to 45% for three months, to 75% for three months, and to 100% for one month. Worked through on Rs 5,00,000 of total advance tax, 234C lands at about Rs 14,000 to Rs 15,000.

Then 234B: he paid nil advance tax against an assessed tax of Rs 5,00,000, far below the 90% threshold, so 234B runs at 1% per month on Rs 5,00,000 from 1 April 2026 until 15 July 2026. That is four months (April, May, June, and part of July counting as a full month), so 4% of Rs 5,00,000 is Rs 20,000.

His total interest is roughly Rs 14,500 plus Rs 20,000, about Rs 34,500, payable on top of the Rs 5,00,000 tax. Now the counterfactual that shows what timing alone is worth. Had Arjun paid the same Rs 5,00,000 on 5 April 2026 instead of 15 July, his 234C would have been identical, because 234C is fixed by what he did during the year and cannot be undone after 31 March, but his 234B would have been just one month, Rs 5,000, because 1 to 5 April counts as a single month. Paying three months earlier saves him Rs 15,000 of 234B for doing nothing but pressing the button sooner. The lesson NRIs miss: once the year is over, 234C is frozen and you cannot fix it, but 234B is still ticking and every month you delay your self-assessment payment adds 1%. Pay the balance the moment you know the number, not when you finally get around to filing.

The defensive move for next year sits one step upstream. Because so much NRI income carries no TDS, the way to kill 234B and 234C is to pay advance tax in the four instalments during the year itself, under minor head 100, sized to clear the 15-45-75-100 thresholds. The full instalment mechanics, including the rule that the last instalment for the March quarter is unforgiving, are in the advance tax guide and the dates are in the NRI tax calendar.

The tax-paid-but-not-credited mismatch, and how to never trigger it

You have paid. The money has left your account. Now the only thing that matters is whether the income tax system credits it against your PAN, your assessment year, and your minor head. If any of those three is wrong, the cash exists but is invisible to your return, and you will get a demand for tax you have already paid. This is the most demoralising failure mode in the whole process, and it is entirely preventable.

The credit lives in two places you must check before filing. Form 26AS is the tax credit statement; your self-assessment challan should appear there under the "Tax Payments" or advance/self-assessment section with its BSR code, Challan Serial Number, date of deposit, and amount, together forming the Challan Identification Number (CIN). The Annual Information Statement (AIS) is the broader statement and also reflects the payment. The realistic timeline is that a correctly-made challan shows up in 26AS and AIS within about three to seven working days. Do not file the same day you pay and assume the credit will follow; build in a week between paying and filing so you can confirm the challan has landed. How to read both statements and reconcile every line is covered in detail in Form 26AS and AIS for NRIs.

Three errors cause almost every mismatch, and an NRI is exposed to all three because the OTP and login friction tempts you into shortcuts.

The wrong assessment year is the most common. Self-assessment tax for the year ended 31 March 2026 is assessment year 2026-27, not 2025-26. The financial year and the assessment year differ by one, and the portal asks for the assessment year, so it is easy to pick the year you are thinking in rather than the year the system wants. Pay under 2025-26 and the money sits against last year's PAN record, useless for this year's return.

The wrong minor head is the error from our Toronto reader: head 400 (regular assessment, against a demand) or head 100 (advance tax) instead of head 300 (self-assessment). A payment under head 100 made after the year ended is technically still your money but the return utility expects the balance under 300, and the credit can fail to pull through cleanly. Worse, head 400 implies you are paying against an assessment demand that may not exist, orphaning the payment entirely.

The wrong PAN is rarer but fatal: a typo in the PAN, or, when a resident pays on your behalf, the helper accidentally paying against their own PAN instead of yours. The challan then credits the wrong person. This is exactly why, when someone in India pays for you, you verify the PAN on their screen before they pay.

If you have already triggered one of these, the fix exists but it is bureaucratic, so know the windows. The e-filing portal now offers online challan correction for minor heads 100, 300 and 400. You can correct the assessment year within 7 days of the challan deposit date, and the major or minor head within 30 days. Correction is allowed only on an unconsumed challan, meaning one not yet claimed in a filed return, and only once per challan. PAN itself cannot be corrected online; a wrong-PAN payment requires approaching your jurisdictional Assessing Officer, which from abroad is slow and painful. The discipline that avoids all of this is to triple-check three fields, PAN, assessment year, and minor head, on the challan preview screen before you authorise payment, and to wait a week and confirm the credit in 26AS before you file. Two minutes of checking saves six weeks of correction requests.

Edge cases

Your registered mobile is an old Indian number you no longer use. This breaks pre-login OTP, the e-verify step at filing, and sometimes bank net banking. Update the contact details inside your e-filing profile to a number you actually carry, or rely on the post-login flow and the option to e-verify through your demat or net banking rather than SMS. Solve this before tax season, not during it.

The foreign card is charged but the portal shows the payment failed. This happens when the gateway times out after debiting the card. Do not re-pay immediately. Check the e-Pay-Tax payment history on the portal and your card statement; if the challan generated a CIN, the payment went through and will appear in 26AS regardless of the error screen. If it genuinely failed, the card charge is usually reversed by the aggregator within a few days. Re-paying in a panic creates a duplicate challan you then have to claim back as a refund.

You owe self-assessment tax but also expect a refund on another head. TDS over-deducted on rent does not automatically net against a capital gains balance you owe. You pay the self-assessment tax in full now, and the over-deducted TDS comes back as a refund after the return is processed. The system settles them on the return, not at the challan stage, so do not under-pay your self-assessment tax expecting the refund to cover it. The refund mechanics are in TDS for NRIs and refunds.

Currency on a foreign card. The tax is denominated in rupees and the gateway charges your card in rupees, so your card issuer applies its own exchange rate and foreign transaction fee. The amount that hits your foreign statement is the rupee tax converted at the issuer's rate plus fees, not a figure you control. For a large payment, the issuer's spread alone can exceed paying through an NRO account, which is a further reason to use Indian net banking or a resident helper when you can.

Section 140A versus the new Act. The 1961 Act's Section 140A is the self-assessment provision most CAs still cite, and challan minor head 300 is unchanged. The Income-tax Act, 2025 re-numbers it, but the payment modes, the heads, and the e-Pay-Tax flow are identical, and the department has confirmed the available tax payment modes do not change regardless of which Act the payment relates to. You do not need to do anything differently; the section number on your CA's note may simply read differently.

The closing read

The honest read is that for an NRI the tax is rarely the obstacle; the plumbing is. The amount you owe is a calculation, but getting rupees from a foreign account into the exact slot the Indian system expects, against the right PAN, year, and head, is where money goes missing and demands appear for tax you have already paid. So for most NRIs the workflow is this: log into the e-filing portal first rather than fighting the pre-login OTP, generate the challan under minor head 300 with the correct assessment year, and pay through your NRO account net banking if it transacts from abroad, the Payment Gateway with a foreign card if it does not, or a trusted resident paying against your PAN if the card is declined. Pay the balance the day you know the number, because 234B keeps charging 1% a month until you do and that interest is pure avoidable cost. Then wait a week and confirm the challan in Form 26AS and the AIS before you file, never the same day. The exception who should not self-manage this is the NRI with a large capital gains balance, a wrong-PAN payment already made, or a challan stuck past the correction window; that is the point to put a CA in India on it, because unwinding a mislabelled payment with the Assessing Officer is genuinely harder than paying correctly the first time. Triple-check three fields, pay early, verify the credit. Everything else is detail.

Related guides

• ITR filing for NRIs: AY 2026-27 master guide
• Advance tax for NRIs: instalments and thresholds
• Form 26AS and AIS for NRIs
• TDS for NRIs and how to claim refunds
• The NRI tax calendar 2026: key dates
• Capital gains tax for NRIs on shares and mutual funds
• All Taxation guides
• NRI banking guides

This guide is educational and general in nature. It is not individual tax advice. Payment portals, gateway partners, transaction charges, and the exact interest your case attracts depend on your figures, your residency, your bank, and rules that change between assessment years, so confirm your specific position and the live portal options with a qualified chartered accountant before you pay.