Advance tax can save you from heavy interest penalties. Learn what advance tax is, who should pay it, due dates for FY 2025-26, how to calculate it, and how to pay advance tax online in India.
Advance tax, advance tax due dates, who should pay advance tax, how to pay advance tax online, advance tax calculation, advance tax penalty, advance tax FY 2025-26.
Advance Tax in India: Meaning, Due Dates, Calculation & Online Payment Process
Paying income tax isn’t something you deal with only at the end of the year. If your total tax liability is above a certain limit, the Income Tax Department requires you to pay tax in advance throughout the year. This system is known as advance tax, and ignoring it can result in interest penalties.
In this article, we explain everything you need to know about advance tax in simple terms.
What Is Advance Tax?
Advance tax means paying your income tax in instalments during the financial year itself, instead of paying it all at once while filing your income tax return.
According to the Income Tax Act (Sections 207 to 219), taxpayers are expected to pay tax as they earn income. This ensures a steady flow of revenue for the government and reduces the burden of a large tax payment at year-end.
Advance tax applies to income from:
- Salary
- Business or profession
- Freelancing or consulting
- Rental income
- Capital gains
- Interest and other sources
Who Should Pay Advance Tax?
You must pay advance tax if:
- Your total tax liability exceeds ₹10,000 in a financial year after adjusting TDS.
- You earn income where TDS is not deducted or is insufficient.
- You are self-employed, a freelancer, or a business owner.
Do Salaried Employees Pay Advance Tax?
Yes, if:
- Your employer has not deducted enough TDS
- You have additional income from rent, investments, side gigs, or freelancing
Advance Tax Rules for Senior Citizens
Senior citizens aged 60 years or above are exempt from paying advance tax only if they do not earn business or professional income.
How to Calculate Advance Tax
Calculating advance tax becomes easy when you follow a step-by-step approach.
Steps to Calculate Advance Tax:
1. Estimate your total income for the financial year.
2. Add income from all sources.
3. Subtract eligible deductions and exemptions.
4. Calculate your taxable income.
5. Apply income tax slab rates (old or new regime).
6. Reduce TDS already deducted.
7. If the remaining tax payable is more than ₹10,000, advance tax must be paid.
Using an online income tax calculator helps avoid errors and interest charges.
Advance Tax Due Dates for FY 2025-26 (AY 2026-27)
For Individuals, Professionals & Businesses:
| Due Date | Advance Tax Payable (Cumulative) |
|---|---|
| 15 June 2025 | 15% |
| 15 September 2025 | 45% |
| 15 December 2025 | 75% |
| 15 March 2026 | 100% |
Paying the correct percentage by each deadline helps you avoid interest under Section 234C.
Advance Tax for Presumptive Taxation (Sections 44AD & 44ADA)
Taxpayers opting for the presumptive taxation scheme have simpler rules:
- 100% of advance tax must be paid by 15 March 2026
- Payment can also be made by 31 March, but interest may apply
How to Pay Advance Tax Online in India
Paying advance tax online is quick and convenient through the Income Tax e-Filing portal.
Step-by-Step Process:
1. Visit the Income Tax e-Filing website
2. Select e-Pay Tax
3. Enter your PAN and registered mobile number
4. Verify using the OTP
5. Choose:
* Tax Type: Income Tax
* Assessment Year: 2026-27
* Payment Type: Advance Tax (100)
6. Enter the tax amount
7. Complete payment using net banking, debit card, or UPI
8. Download and save the challan receipt
Penalty for Not Paying Advance Tax
Failing to pay advance tax on time can result in interest penalties.
Interest Under Section 234C:
* Charged for missing or underpaying instalments
* Calculated for each instalment delay
Interest Under Section 234B:
* Applies if 90% of total tax is not paid by 31 March
* Interest charged at 1% per month
These penalties can significantly increase your tax liability.
What If You Pay Excess Advance Tax?
If you pay more advance tax than required:
* You can claim a refund while filing your return
* The refund is credited directly to your bank account
* Interest may also be paid on excess tax in some cases
Benefits of Paying Advance Tax
* Avoids last-minute tax stress
* Reduces interest penalties
* Improves financial planning
* Keeps you compliant with tax laws
FAQs on Advance Tax
Is advance tax mandatory?
Yes, if your tax liability exceeds ₹10,000 in a financial year.
Can advance tax be paid in one instalment?
Only taxpayers under the presumptive scheme can do so. Others must follow instalment rules.
What happens if I forget to pay advance tax?
Interest under Sections 234B and 234C will be charged.
In summation, Advance Tax is not just a compliance requirement — it’s a smart financial habit. Paying tax as you earn helps avoid penalties, improves cash flow management, and keeps your tax filing smooth and stress-free.
If your tax liability crosses ₹10,000, planning and paying advance tax on time can save you both money and peace of mind.