Published: May 2026 · 6 min read
What is Advance Tax?
Advance tax is the income tax you pay in instalments during the financial year instead of a lump sum at the end. It's essentially "pay-as-you-earn" — the government wants tax revenue throughout the year, not just in March.
Who Must Pay Advance Tax?
You must pay advance tax if your total tax liability for the year (after TDS) exceeds ₹10,000. This typically applies to:
- Freelancers and consultants — no employer deducting TDS on full income
- Business owners — proprietors, partners, directors with non-salary income
- Professionals — doctors, lawyers, CAs with practice income
- Investors — significant capital gains, rental income, dividend income, or interest income where TDS doesn't cover full liability
- Salaried individuals with substantial other income (capital gains, freelancing, rental)
Exemption: Senior citizens (60+) who do not have income from business or profession are exempt from paying advance tax. They can pay their entire tax at the time of filing the return.
Quarterly Due Dates & Instalments
- 15th June — 1st instalment: At least 15% of total estimated tax
- 15th September — 2nd instalment: At least 45% of total estimated tax (cumulative)
- 15th December — 3rd instalment: At least 75% of total estimated tax (cumulative)
- 15th March — 4th instalment: 100% of total estimated tax (cumulative)
For Presumptive Income (Section 44AD/44ADA)
Taxpayers under the presumptive taxation scheme can pay the entire advance tax in a single instalment by 15th March. No quarterly obligation.
How to Calculate Advance Tax
- Estimate total income for the full financial year (salary + business + capital gains + other income)
- Compute tax on this estimated income using applicable slab rates
- Subtract TDS already deducted or expected to be deducted during the year
- Net tax payable = total tax minus TDS. If this exceeds ₹10,000, advance tax is applicable
- Pay quarterly instalments as per the schedule above
How to Pay
- Visit the income tax e-filing portal
- Go to e-Pay Tax → select Income Tax
- Select Advance Tax (100) as the type of payment
- Enter the assessment year, amount, and your details
- Pay via net banking, UPI, debit card, or NEFT/RTGS
- Save the challan receipt (BSR code, challan serial number, date) — you'll need this while filing ITR
Penalties for Non-Payment or Short Payment
- Section 234B — Default in advance tax: Interest at 1% per month on the shortfall amount (from April to the month of assessment). Triggered if advance tax paid is less than 90% of assessed tax.
- Section 234C — Deferment of advance tax: Interest at 1% per month for each quarter where the instalment is short. Calculated for 3 months per quarterly shortfall.
Example: If your total tax is ₹3,00,000 and you paid zero advance tax, the 234B interest alone would be approximately ₹36,000 (12 months × 1% × ₹3L) — plus 234C interest on each quarterly shortfall. That's real money lost to avoidable penalties.
Pro Tips
- Revise estimates quarterly: If income changes mid-year (unexpected capital gains, new client), recalculate and adjust the next instalment
- Slightly overpay rather than underpay: The refund comes with 6% interest from the government, while the penalty for shortfall is 12%. Overpaying is safer.
- Track TDS credits in real time: Check Form 26AS / AIS periodically to know how much TDS has already been deducted — this reduces your advance tax burden
Need help with advance tax computation? We calculate your quarterly instalments, send you reminders before each due date, and ensure you never pay a rupee in avoidable interest. Get started →