Advance tax is the income tax paid in installments during the financial year rather than a lump sum at year end. If your total tax liability exceeds ₹10,000 after subtracting TDS, you must pay advance tax. Missing installments attracts interest under Sections 234B and 234C.
Who Must Pay Advance Tax?
- Any taxpayer (individual, firm, company) whose estimated tax liability exceeds ₹10,000 (after TDS deduction)
- Freelancers, consultants, business owners — since TDS is not deducted at source from all their income
- Individuals with high interest income, rental income, capital gains
- Senior citizens (75+ years) with only pension and interest income are EXEMPT
Advance Tax Due Dates for FY 2025–26
| Installment | Due Date | % of Total Tax Liability (Non-Presumptive) | Presumptive (Sec 44AD/44ADA) |
|---|---|---|---|
| 1st Installment | June 15, 2025 | 15% | — |
| 2nd Installment | September 15, 2025 | 45% (cumulative) | — |
| 3rd Installment | December 15, 2025 | 75% (cumulative) | — |
| 4th Installment | March 15, 2026 | 100% (cumulative) | 100% by March 15 |
Note: Taxpayers opting for presumptive taxation under Section 44AD or 44ADA pay 100% advance tax in a single installment by March 15. They are exempt from the June/September/December installments.
How to Calculate Advance Tax
- Estimate your total income for the full financial year (salary, business profit, capital gains, rental, interest)
- Calculate income tax on estimated total income (apply applicable slab rates)
- Add applicable surcharge and health & education cess (4%)
- Deduct TDS already deducted or expected to be deducted (from salary, bank FD interest etc.)
- If balance tax > ₹10,000 → you need to pay advance tax
- Pay 15% by June 15, 45% by September 15, 75% by December 15, 100% by March 15
How to Pay Advance Tax Online (Challan 280)
- Go to incometax.gov.in → e-Pay Tax (or tin-nsdl.gov.in)
- Select Challan 280 (Income Tax on Companies) or Challan 280 (Individual/HUF/Non-Corporate)
- Select Assessment Year: 2026-27
- Select Type of Payment: (100) Advance Tax
- Enter PAN, name, address details
- Enter tax amount and proceed to bank payment (net banking or credit/debit card)
- Save the challan receipt — CIN number for future reference
Interest for Late / Short Payment — Sec 234B & 234C
| Section | Interest Rate | When Applicable |
|---|---|---|
| 234C | 1% per month | If installment less than required % by each due date |
| 234B | 1% per month | If advance tax paid < 90% of total tax liability |
| 234A | 1% per month | If ITR not filed by due date (on outstanding tax) |