What is advance tax?
Reviewed by Ranga & Company
Advance tax: Advance tax is income tax paid in instalments during the financial year, instead of all at once after it ends, by anyone whose tax for the year after TDS is ₹10,000 or more.
At a glance
- Who pays
- Anyone with tax of ₹10,000+ after TDS (business owners, investors, landlords, freelancers)
- Exempt
- Resident senior citizens with no business or professional income
- Instalments
- 15 June, 15 September, 15 December, 15 March
- Presumptive (44AD/44ADA)
- Single instalment of 100% by 15 March
- Interest
- 234B for short payment, 234C for late instalments, 1% a month
Instalment schedule
| Due date | Cumulative tax to pay |
|---|---|
| 15 June | 15% |
| 15 September | 45% |
| 15 December | 75% |
| 15 March | 100% |
How to calculate and pay
- Estimate your income for the full year, including capital gains already made
- Work out the tax, then subtract expected TDS and TCS
- If the balance is ₹10,000 or more, pay the cumulative percentage due by each date
- Pay online through e-Pay Tax as 'Advance tax' for the correct assessment year
Capital gains during the year
If you sell property or shares mid-year, you can't predict the gain in advance, so no 234C interest applies on that gain as long as you pay the tax on it in the instalments that fall after the sale.
Common mistakes
- Salaried people with large interest or rental income assuming TDS covers everything
- Paying advance tax under the wrong assessment year
- Skipping the 15 March instalment and paying everything at filing time with interest
Frequently asked questions
Who needs to pay advance tax?
Anyone whose tax liability for the year, after TDS and TCS, is ₹10,000 or more. Resident senior citizens without business income are exempt.
What is the next advance tax due date?
Instalments are due on 15 June, 15 September, 15 December and 15 March of the financial year.
What happens if I don't pay advance tax?
You pay interest of 1% a month under section 234B on the shortfall and under 234C for missed instalments.
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