Advance Tax means paying your income tax in instalments during the financial year, instead of waiting till year-end. It helps the government collect revenue throughout the year and helps you avoid interest and penalties.
Who Needs to Pay Advance Tax ?
As per Section 208 of the Income Tax Act:
If your estimated total tax liability exceeds ₹10,000 in a financial year, you are liable to pay advance tax.
Exemption:
Senior Citizens (60+ years) without business income are not required to pay advance tax.
How to Calculate Advance Tax?
Step-by-Step Guide:
- Estimate total income for FY 2025-26.
- Subtract exemptions (like Sec 10) and deductions (like 80C, 80D, etc.).
- Compute tax liability as per your selected tax regime (Old or New).
- Subtract any TDS or TCS already deducted.
- If the net tax payable is more than ₹10,000 → Advance Tax is applicable.
Example:
| Particulars | Amount (₹) |
| Estimated Total Income | 20,00,000 |
| Less: Deductions (80C etc.) | 1,50,000 |
| Net Taxable Income | 18,50,000 |
| Tax Payable (Approx.) | 3,37,500 |
| Less: TDS Already Deducted | 1,00,000 |
| Advance Tax Required | 2,37,500 |
Advance Tax Due Dates (FY 2025-26 / AY 2026-27)
| Due Date | % of Total Tax Payable |
| 15th June 2025 | 15% |
| 15th Sept 2025 | 45% (cumulative) |
| 15th Dec 2025 | 75% (cumulative) |
| 15th March 2026 | 100% |
For presumptive income under Sections 44AD or 44ADA – full 100% of tax must be paid by 15th March.
Penalties for Late or Non-Payment
- Section 234B – 1% per month interest if advance tax not paid.
- Section 234C – Interest for shortfall or late payment in scheduled instalments.
How to Deposit Advance Tax
- Go to
https://www.incometax.gov.in - Click on ‘e-Pay Tax’ under Quick Links
- Choose Assessment Year: 2026-27
- Select “Advance Tax (100)” as payment type
- Fill in PAN, bank details and amount
- Choose mode (Net Banking, UPI, Debit Card, etc.)
- Make payment and download Challan 280
Practical Tips
- Always check Form 26AS and AIS for advance tax or TDS credits.
- Pay in advance if you expect additional income (e.g., FD interest, capital gains).
- Slight overpayment is better than underpayment (avoids interest).
Final Words
Advance Tax is not just for salaried or big business taxpayers. Even freelancers, consultants, and investors must check if they are liable. If ignored, interest under Sections 234B and 234C can add up fast.
Stay ahead. Stay compliant.
File smart. Pay smart.
