What is Advance Tax?
Advance Tax is the payment of income tax in installments during the financial year instead of paying the entire tax amount at year-end. It follows the “Pay as You Earn” principle under the Income Tax Act, 1961.
If a taxpayer’s total tax liability exceeds ₹10,000 in a financial year, advance tax must be paid as per prescribed due dates.
Advance tax ensures steady revenue collection by the government and helps taxpayers avoid interest and penalties.
Who is Required to Pay Advance Tax?
Advance tax is payable by:
- Individuals
- HUFs
- Firms
- LLPs
- Companies
- Professionals
- Business owners
If total tax liability after adjusting TDS exceeds ₹10,000, advance tax must be paid.
Even salaried individuals must pay advance tax if they have additional income such as:
- Capital gains
- Interest income
- Rental income
- Freelance or professional income
- Lottery or race winnings
Senior citizens (aged 60 or above) not having business or professional income are exempt from advance tax.
Advance Tax Due Dates (FY 2025-26)
| Due Date | Minimum Cumulative Tax Payable |
|---|---|
| On or before 15th June | 15% |
| On or before 15th September | 45% |
| On or before 15th December | 75% |
| On or before 15th March | 100% |
These due dates apply to individuals, firms, LLPs, and companies.
Advance Tax for Presumptive Taxation (Section 44AD / 44ADA)
Taxpayers opting for presumptive taxation are required to pay 100% of their advance tax liability on or before 15th March of the financial year.
How to Pay Advance Tax
Advance tax must be paid online through the Income Tax e-Pay Tax facility using Challan ITNS 280.
Steps:
- Visit the Income Tax e-filing portal
- Select “e-Pay Tax”
- Choose Advance Tax (Self Assessment Tax – 100)
- Select relevant assessment year
- Make payment via net banking / UPI / debit card
Offline payment facility is limited and mostly replaced by online payment.
If You Miss the Deadline
Interest for Non-Payment or Short Payment
Interest is levied under:
Section 234C – Deferment of Advance Tax
1% per month on shortfall in installment payments.
Section 234B – Non-Payment of Advance Tax
If advance tax paid is less than 90% of total tax liability, interest at 1% per month is charged from 1st April of assessment year until payment.
Excess Advance Tax Paid
If advance tax paid exceeds total tax liability:
- Excess amount is refunded after ITR processing
- Interest under Section 244A may be granted on eligible excess amount
Refund is credited directly to the taxpayer’s bank account.
Common Advance Tax Mistakes
- Ignoring capital gains income
- Not estimating business profits correctly
- Not reconciling TDS before paying advance tax
- Missing installment deadlines
- Incorrect challan selection
For assistance with advance tax calculation, installment planning, and online payment compliance, consult experienced tax professionals to ensure timely and accurate tax payments.
