TaxTMI 
TaxTMI 
TaxTMI 
When it comes to managing taxes in India, one of the most important yet often misunderstood aspects is advance tax. Many taxpayers realize their liability only at the end of the financial year, which may lead to last-minute stress, penalties, and even interest charges. Understanding and paying advance tax on time can save you from all of this.
This guide will explain what advance tax is, who needs to pay it, how it is calculated, due dates, and practical tips to make the process easier.
What is Advance Tax?
Advance tax is the “pay as you earn” system of income tax collection in India. Instead of paying your entire tax liability at the end of the financial year, you pay it in installments during the year based on your estimated income.
It ensures that the government receives a steady flow of revenue, and it helps taxpayers avoid a sudden large outflow at the end of the year.
Who Needs to Pay Advance Tax?
You are liable to pay advance tax if your total tax liability for the year is Rs. 10,000 or more after considering TDS (Tax Deducted at Source).
This applies to:
- Salaried individuals (if they have significant income apart from salary, like rent, interest, or capital gains).
- Freelancers and self-employed professionals.
- Businesses and entrepreneurs.
- Investors earning from shares, mutual funds, or property.
Exception: Senior citizens (60 years or above) who do not have business income are exempt from paying advance tax.
How to Calculate Advance Tax?
Calculating advance tax requires estimating your income for the year. Here’s a simple step-by-step approach:
Estimate your total income from all sources: salary, business, profession, rent, interest, capital gains, etc.
Deduct eligible exemptions and deductions (such as HRA, Section 80C, 80D, etc.).
Compute tax liability using the applicable slab rates.
Subtract TDS/TCS already deducted.
If the balance tax payable is Rs.10,000 or more, you must pay advance tax.
Advance Tax Due Dates (FY 2025-26)
Advance tax is paid in four installments during the financial year.
15th June – 15% of total liability
15th September – 45% of total liability (cumulative)
15th December – 75% of total liability (cumulative)
15th March – 100% of total liability (cumulative)
Note: Taxpayers opting for the presumptive taxation scheme under Section 44AD/44ADA need to pay the entire advance tax in one installment by 15th March.
How to Pay Advance Tax?
You can pay advance tax easily online through the Income Tax e-Filing portal or through authorized bank branches.
Steps for online payment:
Visit TIN-NSDL or Income Tax portal.
Select ‘e-Pay Tax’ option.
Choose Challan No. 280 (Advance Tax).
Fill in PAN details, assessment year, and payment type.
Make payment via net banking, debit card, or UPI.
Save the receipt (challan) for records.
Interest and Penalty for Late Payment
If you fail to pay advance tax on time, you may face interest under:
Section 234B – for not paying advance tax or paying less than 90% of liability.
Section 234C – for late payment of installments.
This can increase your tax outflow unnecessarily.
Practical Tips for Taxpayers
Keep track of additional income (like interest, dividends, or capital gains) during the year.
Review your tax liability every quarter to avoid shortfall.
Use Form 26AS and AIS to check TDS already deducted.
Don’t wait till March—spread out your payments to avoid financial burden.
Consult a tax professional if you have multiple income sources or complex tax situations.
Final Thoughts
Advance tax may sound complicated at first, but once you understand the basics, it’s actually a very practical system. It not only helps the government but also makes it easier for taxpayers to manage their cash flow and avoid penalties.
By estimating your income correctly and paying on time, you can stay stress-free during tax season.
Staying ahead with advance tax is not just about compliance—it’s about smart financial planning.