Advance tax is pay-as-you-earn income tax. Instead of paying the entire tax liability at year-end, you spread it across four instalments. If your total tax liability for the year exceeds ₹10,000, advance tax payment is mandatory.
Who Must Pay Advance Tax?
- Any individual, business, or company with total tax liability > ₹10,000 after TDS credits
- Freelancers, self-employed, professionals, business owners
- Salaried employees with significant other income (capital gains, rental, FD interest, etc.)
- Senior citizens (60+) are exempt IF they have no business or professional income
- Companies and firms — always required regardless of tax liability
Advance Tax Due Dates FY 2025–26
| Instalment | Due Date | Minimum % to Pay |
|---|---|---|
| 1st Instalment | June 15, 2025 | 15% of estimated tax liability |
| 2nd Instalment | September 15, 2025 | 45% (cumulative) |
| 3rd Instalment | December 15, 2025 | 75% (cumulative) |
| 4th Instalment | March 15, 2026 | 100% (full liability) |
Note: Presumptive taxpayers (Section 44AD/44ADA) pay 100% of advance tax in ONE instalment by March 15 — no requirement for the first three instalments.
Interest for Non-Payment: Sections 234B and 234C
| Section | Trigger | Interest Rate |
|---|---|---|
| 234C | You paid less than required % at each due date | 1% per month on the shortfall for 3 months (1 month for last instalment) |
| 234B | You paid less than 90% of total tax by March 31 | 1% per month from April 1 to date of actual payment |
How to Calculate and Pay Advance Tax
- Estimate your total income for the year (salary + business + capital gains + other)
- Estimate deductions (80C, 80D, HRA etc.)
- Calculate tax on estimated net income at applicable slab rates
- Deduct TDS already deducted by employer/bank/others
- Balance is your net tax liability — pay instalments as above if > ₹10,000
- Pay online at incometax.gov.in → e-Pay Tax → Challan 280 → Advance Tax (code 100)