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What Is Advance Tax Payment: Due Dates, Calculator & Procedure

If your total tax liability exceeds ₹10,000 in a financial year (after TDS deductions), you are required to pay advance tax. You do not need to wait until the end of the financial year to clear your dues. Instead, you pay it in instalments across the year. This applies to salaried individuals with additional income, freelancers, business owners, and corporate taxpayers. Advance tax helps the government receive a steady income flow and ensures that you manage your own taxes in time, instead of accumulating a large liability at year-end.

You can calculate your advance tax by estimating your total income, deducting applicable exemptions and deductions, and applying the income tax slab rates. Then subtract TDS and any relief or rebates to arrive at your advance tax amount. You need to pay this amount in instalments as per due dates fixed by the Income Tax Department.

What is Advance Tax?

Advance tax, often termed as the "pay-as-you-earn" tax, is the income tax paid in advance during the financial year in which the income is earned. Instead of waiting until the end of the fiscal year to settle tax dues, taxpayers make periodic payments based on their estimated income. This approach aligns tax payments with income generation, facilitating smoother financial planning for both the government and taxpayers.

What is Advance Tax Payment?

Advance tax payment involves the process of remitting portions of one's anticipated tax liability at specified intervals within the financial year. These payments are made based on estimated income, and any discrepancies between estimated and actual income can be adjusted in subsequent installments or during the final tax filing.

Who Should Pay Advance Tax?

Advance tax is applicable to various categories of taxpayers:

  • Salaried Individuals: If the tax liability exceeds ₹10,000 after accounting for Tax Deducted at Source (TDS), advance tax must be paid.
  • Freelancers and Professionals: Individuals with income from professions such as consulting, legal services, or freelance work are required to pay advance tax if their tax liability surpasses ₹10,000.
  • Businesses: Both corporate and non-corporate entities must comply with advance tax provisions if their tax liability exceeds the specified threshold.
  • Non-Resident Indians (NRIs): NRIs with income accruing in India that results in a tax liability exceeding ₹10,000 are also obligated to pay advance tax.

Note: Senior citizens aged 60 years or above, who do not have income from business or profession, are exempt from paying advance tax.

Advance tax due dates for FY 2025–26 – individuals & corporate taxpayers

Whether you are salaried with additional income or running a company, you need to pay advance tax in four instalments. The government has specified clear due dates for each quarter. Paying on time avoids interest under sections 234B and 234C of the Income Tax Act. You should stay aware of these timelines and plan accordingly. This ensures smooth compliance with tax laws and saves you from penalties due to delay or underpayment.

Advance tax schedule for individuals and corporates

Due date

Advance tax payable

On or before 15 June

At least 15% of total estimated tax liability

On or before 15 September

At least 45% of total estimated tax liability (cumulative)

On or before 15 December

At least 75% of total estimated tax liability (cumulative)

On or before 15 March

100% of total estimated tax liability (cumulative)

Advance tax due dates for FY 2025–26 – for taxpayers under presumptive taxation scheme

If you have opted for the presumptive taxation scheme under Section 44AD or Section 44ADA, your advance tax liability works differently. You only need to pay advance tax once during the year. This makes the process simpler if you are a small business owner or a professional opting for presumptive income. However, you still need to follow the due date set for this category.

Make sure you calculate your estimated tax liability as per the presumptive income rules and pay it by the stipulated date to avoid interest and penalties. The table below shows the due date.

Advance tax schedule for presumptive scheme taxpayers

Due date

Advance tax payable

On or before 15 March

100% of total tax liability under presumptive scheme

Advance tax due dates for FY 2025–26 – taxpayers opting presumptive taxation

You may be a professional or business owner opting into the presumptive taxation scheme voluntarily. In that case, you are still required to make the full tax payment in advance, but only once during the year. Unlike the four-quarter structure for other taxpayers, this one-time payment must be done by 15 March of the financial year.

It is important for you to be aware of this simplified structure, especially if you plan your taxes in one go. Paying the entire advance tax by this deadline helps you avoid interest and ensures you remain compliant with the Income Tax Department’s rules.

Advance tax schedule for those opting presumptive taxation

Due date

Advance tax payable

On or before 15 March

100% of total tax liability under presumptive taxation

How is Advance Tax Payment Calculated?

To calculate advance tax:

  1. Estimate Total Income: Compute the total income expected during the financial year, including salary, business income, capital gains, interest, and other sources.
  2. Deduct Allowable Expenses and Deductions: Subtract expenses and deductions permissible under the Income Tax Act, such as those under Sections 80C, 80D, etc.
  3. Compute Tax Liability: Apply the applicable income tax rates to the net taxable income to determine the total tax liability.
  4. Subtract TDS: Deduct the amount of tax expected to be withheld or already withheld (TDS) by employers or others.
  5. Determine Advance Tax Liability: If the resulting tax liability exceeds ₹10,000, calculate the advance tax payable as per the due dates and percentages mentioned above.

Example for Advance Tax Calculation

Scenario: Mr. Sharma, a freelancer, estimates his taxable income for the financial year to be ₹12,00,000. He anticipates deductions under Section 80C amounting to ₹1,50,000.

Calculation:

  1. Gross Taxable Income: ₹12,00,000
  2. Less: Deductions under Section 80C: ₹1,50,000
  3. Net Taxable Income: ₹10,50,000
  4. Tax Liability Calculation:
    • Up to ₹2,50,000: Nil

    • ₹2,50,001 to ₹5,00,000: 5% of ₹2,50,000 = ₹12,500

    • ₹5,00,001 to ₹10,00,000: 20% of ₹5,00,000 = ₹1,00,000

    • Above ₹10,00,000: 30% of ₹50,000 = ₹15,000

    • Total Tax: ₹12,500 + ₹1,00,000 + ₹15,000 = ₹1,27,500

  5. Add: Health and Education Cess (4% of ₹1,27,500): ₹5,100
  6. Total Tax Liability: ₹1,32,600
  7. Advance Tax Installments:
    • 15th June (15%): ₹19,890

    • 15th September (45%): ₹59,670

    • 15th December (75%): ₹99,450

    • 15th March (100%): ₹1,32,600

Note: Any TDS deducted can be adjusted against these amounts.

How to Pay Advance Tax Online?

You can pay your advance tax online using the official e-Payment facility on the Income Tax Department’s website. The process is straightforward, and it ensures quick payment without visiting any tax office. You can do it using your savings account, debit card, or net banking. The steps below explain how you can pay your advance tax in a few minutes from wherever you are.

These steps guide you through the online process so that you do not miss any deadlines. Be sure to keep a copy of the challan and payment confirmation for your records.

Steps to pay advance tax online

  1. Visit the official e-Filing portal
     Begin by visiting the Income Tax Department's official portal (https://www.incometax.gov.in). This is where you will find the e-Pay Tax facility and other related tools to help you make tax payments securely online.

  2. Select the e-Pay Tax option
     Click on the ‘e-Pay Tax’ button. You will be prompted to log in using your PAN and password or opt to proceed without logging in if you are paying directly. Choose the appropriate path based on your preference.

  3. Choose the correct challan (ITNS 280)
     Select Challan No./ITNS 280, which is meant for advance tax payment for individuals or businesses. Ensure you choose the correct assessment year and category to avoid any errors in submission.

  4. Fill in payment details carefully
     Enter your PAN, address, bank account, and tax payment details. Select ‘Advance Tax’ as the payment type and confirm the amount. Double-check all fields to prevent delays or incorrect payments.

  5. Make the payment and save the receipt
     Use your preferred net banking or debit card to complete the payment. Once successful, the system generates a Challan Identification Number (CIN). Save or print the challan for reference during ITR filing.

Advance Tax Payment: Exemptions

The following individuals are exempt from paying advance tax:

  • Senior Citizens: Individuals aged 60 years or above who do not have income from business or profession.
  • Taxpayers with Tax Liability Below ₹10,000: If the total tax liability after TDS is less than ₹10,000, advance tax is not applicable.

Advance Tax Payment: Refund

  • If the advance tax paid is higher than the total tax liability, the taxpayer may be eligible for a refund.
  • Refunds are processed by the Income Tax Department after the filing of the Income Tax Return (ITR).
  • Interest under Section 244A may be applicable on the refund amount if the refund is delayed.
  • The refund can be tracked through the Income Tax Department’s e-filing portal.

What is the Interest on Late Payment of Advance Tax?

Late payment of advance tax attracts interest under Sections 234B and 234C of the Income Tax Act.

Section

Condition

Interest Rate

234B

If at least 90% of the total tax is not paid before the financial year ends

1% per month on the outstanding tax amount

234C

If advance tax instalments are not paid as per schedule

1% per month on the shortfall amount

Interest is computed on a simple interest basis and is applicable from the due date of the instalment until the date of actual payment.

Benefits of Advance Tax

  • Eases financial burden: Paying tax in instalments helps in managing cash flow effectively.
  • Avoids interest penalties: Timely payment reduces interest liabilities under Sections 234B and 234C.
  • Enhances tax compliance: Ensures systematic tax payments as per statutory deadlines.
  • Boosts government revenue: Helps the government maintain a steady inflow of funds throughout the year.
  • Applicable to various taxpayers: Covers salaried individuals, freelancers, and businesses with specified tax liabilities.

Conclusion

Advance tax is an important compliance requirement under the Income Tax Act. It applies to individuals and entities with a tax liability exceeding Rs. 10,000 in a financial year. Timely payment of advance tax helps in avoiding interest penalties and managing tax obligations effectively. Taxpayers can pay advance tax through designated bank branches or the online tax payment portal provided by the government.

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Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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