Advance Tax is a system where income tax is paid in installments during the financial year instead of paying the entire amount at the end of the year. Any taxpayer with a liability exceeding ₹10,000 in a financial year must pay advance tax. Adhering to the advance tax payment schedule and due dates is essential to avoid interest penalties under Sections 234B and 234C of the Income Tax Act.
In this guide, we will explain what advance tax is, its applicability, installment structure, due dates, and exceptions, along with practical examples.
What is Advance Tax?
Advance Tax refers to income tax paid in multiple installments before the financial year ends, instead of a one-time payment later. The provisions are outlined under Sections 207 to 219 of the Income Tax Act.
Taxpayers need to estimate their total income at the start of the year and accordingly compute their tax liability. Payments must then be made in fixed percentages across four installments, as per the deadlines set by the Income Tax Department.
Why is Advance Tax Important?
- Better tax planning: Since taxpayers must estimate income and liability early in the year, it allows for effective planning of deductions and strategies to minimize taxes.
- Avoid interest and penalties: Timely installment payments prevent charges for late payment under tax laws.
- Ease of payment: For those with high liabilities, splitting payments into four installments is more convenient than paying in one lump sum.
Who Should Pay Advance Tax?
According to Section 208 of the Income Tax Act, any taxpayer whose estimated tax liability for a financial year exceeds ₹10,000 must pay advance tax. This rule applies to all categories of taxpayers, including salaried individuals, self-employed professionals, freelancers, and businesses.
Who is Exempt from Paying Advance Tax?
- Senior citizens aged 60 years or above are not required to pay advance tax if they do not earn income from business or profession.
- However, if a senior citizen has income from business or professional activities, they must comply with advance tax provisions.
Advance Tax Due Dates for FY 2025-26
For Regular Taxpayers:
| Instalment | Due Date | Percentage of Advance Tax Payable |
| 1st Instalment | On or before 15th June 2025 | 15% of tax liability |
| 2nd Instalment | On or before 15th September 2025 | 45% of tax liability (minus tax already paid) |
| 3rd Instalment | On or before 15th December 2025 | 75% of tax liability (minus tax already paid) |
| 4th Instalment | On or before 15th March 2026 | 100% of tax liability (minus tax already paid) |
Note: No interest under Section 234C will be charged if at least 12% of tax is paid by the first instalment and 36% by the second instalment.
For Taxpayers under Presumptive Taxation (Sections 44AD & 44ADA):
Freelancers and small businesses opting for the Presumptive Taxation Scheme need to pay:
| Due Date | Percentage of Advance Tax Payable |
| On or before 15th March 2026 | 100% of advance tax liability |
Alternatively, taxpayers under presumptive taxation can pay their entire tax liability by 31st March. However, businesses under Section 44AE must follow the standard four-installment schedule prescribed by the Income Tax Department.
How to Calculate Advance Tax?
Calculating advance tax accurately requires evaluating all your income sources, deductions, exemptions, and the most suitable tax regime. Follow this step-by-step approach to determine your advance tax liability and instalment amounts:
Step 1: Review your income from previous financial years. Estimate how much more or less you are likely to earn in the current year. Take into account any new income, such as capital gains from property sales, gratuity, or other one-time receipts.
Step 2: Factor in all tax-saving investments, exemptions, and deductions available to you. These may include medical insurance premiums, home loan principal and interest, HRA, donations, start-up deductions, capital gains exemptions, and more.
Step 3: Estimate your total taxable income after deductions.
Step 4: Use a tax calculator to compare both the old and new tax regimes, and select the one most beneficial to you. Calculate your tax liability based on the estimated taxable income.
Step 5: Pay the applicable percentage of this tax liability as per the due dates for advance tax instalments. If your income or expenses change mid-year, you can revise your estimate and adjust future instalments.
👉 Important: If your total tax liability is more than ₹10,000 in a financial year, paying advance tax is mandatory.
Illustration Format for Advance Tax Calculation:
| Particulars | Amount (₹) |
| Gross Total Income | XXX |
| (-) Deductions under Chapter VI | XXX |
| Net Total Income | XXX |
| Tax Liability | XXX |
| (+) Surcharge | XXX |
| (+) Health & Education Cess | XXX |
| Gross Tax Liability | XXX |
| (-) TDS/TCS | XXX |
| Net Tax Liability | XXX |
Advance tax must be paid in instalments as follows:
- 15% by June
- 45% by September
- 75% by December
- 100% by March
Income Estimation for Advance Tax
| Particulars | Amount (₹) | Amount (₹) |
| Income from Profession | ||
| Gross Receipts | 20,00,000 | |
| Less: Expenses | 12,00,000 | 8,00,000 |
| Income from Other Sources | ||
| Interest from Fixed Deposit | 10,000 | |
| Gross Total Income | 8,10,000 | |
| Less: Deductions | ||
| Contribution to PPF (u/s 80C) | 40,000 | |
| LIC Premium (u/s 80C) | 25,000 | |
| Subtotal – Section 80C | 65,000 | |
| Deduction under Section 80D (Medical Insurance) | 12,000 | |
| Total Deductions | 77,000 | |
| Net Total Income | 7,33,000 | |
| Tax Payable | 59,100 | |
| Add: Health & Education Cess @ 4% | 2,364 | |
| Gross Tax Liability | 61,464 | |
| Less: TDS | 30,000 | |
| Net Advance Tax Liability | 31,464 |
Advance Tax Instalments
| Due Date | % of Advance Tax | Tax Payable (₹) |
| 15th June | 15% | 4,700 |
| 15th September | 45% | 9,400 (14,100 – 4,700) |
| 15th December | 75% | 9,400 (23,500 – 14,100) |
| 15th March | 100% | 7,900 (31,400 – 23,500) |
Notes:
- The above illustration is based on the old tax regime, since deductions under Section 80C provide benefits to the assessee and are not available in the new regime.
- Advance tax is applicable only if the net tax liability, after adjusting TDS/TCS, is greater than ₹10,000.
How to Pay Advance Tax Online?
Follow the steps below to make your advance tax payment through the Income Tax Department’s e-filing portal:
Step 1: Visit the official Income Tax e-filing portal.
Step 2: On the homepage, go to the “Quick Links” section and click on “e-Pay Tax.” You can also find it by searching “e-Pay Tax” in the search bar.
Step 3: Enter your PAN, confirm it, provide your mobile number, and click Continue.
Step 4: Enter the 6-digit OTP received on your mobile and proceed.
Step 5: Choose “Income Tax” as the payment option and click Proceed.
Step 6: Select the Assessment Year 2026-27 and choose “Advance Tax (100)” as the payment type.
Step 7: Fill in the required tax details.
Step 8: Pick your payment method and select your bank, then click Continue.
Step 9: Review the challan details carefully and click “Pay Now.” Use the Edit option if you need to make corrections.
Step 10: Once the payment is successful, an acknowledgement receipt will appear on the screen. This challan will contain the BSR code and challan serial number—make sure to save a copy for your records, as you’ll need these details while filing your income tax return.
How to Use the Challan Correction Feature?
If you need to correct errors in your tax challan, follow these steps:
- Log in to the Income Tax e-filing portal.
- Go to the “Services” tab and select “Challan Correction.”
- Click on “Create Challan Correction Request.”
- Select the type of correction you want to make (e.g., Assessment Year, Major Head, Minor Head).
- Enter either the Assessment Year or the Challan Identification Number (CIN).
- Based on your choice, you will see either the CIN details or a list of challans for the chosen year. Select the challan you want to modify.
- Provide the correct information.
- Verify the correction using one of the following:
- Aadhaar OTP
- Digital Signature Certificate (DSC)
- Electronic Verification Code (EVC) via net banking, Demat, or bank account.
- Aadhaar OTP
- Once verified, you will receive a success message along with a transaction ID. Keep this ID safe to track the status of your correction request.
Advance Tax Late Payment Interest
If you delay or underpay your advance tax, interest is charged under Sections 234B and 234C of the Income Tax Act.
Interest under Section 234B
- You must pay at least 90% of your total tax liability (through Advance Tax or TDS/TCS) by 31st March.
- If not, interest @1% per month is charged on the unpaid amount.
Interest under Section 234C
Interest applies if you miss the advance tax installment deadlines:
| Due Date | Required % of Tax Payable | Interest | Period | Calculation Basis |
| 15th June | 15% | 1% p.m. | 3 months | 15% of tax – tax paid before June 15 |
| 15th Sept | 45% | 1% p.m. | 3 months | 45% of tax – tax paid before Sept 15 |
| 15th Dec | 75% | 1% p.m. | 3 months | 75% of tax – tax paid before Dec 15 |
| 15th Mar | 100% | 1% p.m. | 1 month | 100% of tax – tax paid before Mar 15 |
Adjustment of Excess or Short Advance Tax
- If you pay less tax than required, the balance must be paid as self-assessment tax with interest.
- If you pay more tax than due, the excess is refunded by the Income Tax Department.
✅ Conclusion: Paying advance tax on time helps avoid interest under Sections 234B and 234C. Delays attract 1% per month interest, while overpayments make you eligible for a refund.
Advance Tax – Frequently Asked Questions (FAQs)
Q1. I made an error in my Advance Tax challan. How can I correct it?
The Income Tax Department now provides an online challan correction facility. You can rectify details like Assessment Year, Major Head, and Minor Head.
- Assessment Year corrections must be made within 7 days of payment.
- Major/Minor Head corrections can be made within 30 days of payment.
Q2. When should I pay Advance Tax?
If your total tax liability (after reducing TDS) exceeds ₹10,000 in a financial year, you are required to pay advance tax in installments.
Q3. Will I be penalized if I don’t pay Advance Tax?
Yes. Failure to pay advance tax leads to interest charges under Sections 234B and 234C of the Income Tax Act.
Q4. What if I miss the 15th March deadline for the last installment?
You can still make the payment on or before 31st March. Any payment made by this date is still considered as advance tax.
Q5. Why should I pay Advance Tax?
Advance tax ensures a steady revenue flow for the government and helps taxpayers avoid a heavy year-end tax burden. Timely payments also help you avoid interest penalties.
Q6. How can I download my Advance Tax challan/receipt?
Visit the NSDL OLTAS portal and select CIN-based view. Enter the required details to view your challan, which you can download or print. Alternatively, you can log in to your bank’s website (used for payment) and download the challan from there.
Q7. Can I pay Advance Tax after the due date?
Advance Tax must be paid in 4 installments (15th June, 15th Sept, 15th Dec, 15th Mar). If payments are delayed, 1% monthly interest will be levied.
Q8. How do I pay Advance Tax through SBI?
- Calculate your liability using an advance tax calculator.
- Select Challan 280 on the e-Pay Tax option.
- Fill in details and choose SBI net banking to complete the payment.
Q9. What is the minimum Advance Tax payable by 31st March?
At least 90% of the total tax liability must be paid by 31st March. Otherwise, 1% interest per month is charged on the shortfall.
Q10. What percentage of tax should be paid by 15th September?
By 15th September, you must have paid 45% of your total tax liability.
Q11. How do I calculate my taxable income for Advance Tax?
Estimate income by reviewing:
- Previous year’s income trends.
- New income sources (capital gains, property sale, etc.).
- Eligible deductions/exemptions.
This helps estimate your taxable income and liability.
Q12. Do NRIs have to pay Advance Tax?
Yes. NRIs earning income in India above ₹10,000 are required to pay advance tax.
Q13. I am a senior citizen with only pension and interest income. Do I need to pay Advance Tax?
No. Resident senior citizens without income from business/profession are exempt from advance tax.
Q14. How can I check the status of my Advance Tax payment?
- Visit the NSDL OLTAS portal and select CIN-based view.
- Or log in to the Income Tax e-filing portal → My Account → View Form 26AS.
Q15. What if my income is unpredictable (e.g., capital gains, lottery, etc.)?
For such income, tax must be paid in the remaining installments, or before 31st March if no installment is left, to avoid interest.
Q16. Do salaried employees need to pay Advance Tax?
Usually, no, since TDS is deducted by the employer. However, if TDS is insufficient compared to your total tax liability, you must pay advance tax.
Q17. Can advance tax be paid offline?
Yes. You can visit an authorized bank branch and deposit advance tax using Challan 280.
Q18. Can I revise my Advance Tax payments during the year?
Yes. If your income estimate changes, you can adjust and pay the revised liability in the next installment.
Q19. What happens if I overpay Advance Tax?
Any excess amount will be refunded by the Income Tax Department, usually along with interest.
Q20. Can I pay Advance Tax using a credit card?
No. Advance tax can only be paid via net banking, debit card, NEFT/RTGS, or UPI through authorized banks.
Q21. Is GST included in Advance Tax calculation?
No. Advance Tax relates only to income tax liability, not GST or other indirect taxes.
