Advance tax is an important part of the Indian income tax system. Under the “pay as you earn” principle, taxpayers must pay income tax during the financial year instead of paying the entire tax liability at the end of the year.
If your total tax liability exceeds ₹10,000 in a financial year, you must pay advance tax. This rule applies to professionals, freelancers, business owners, and individuals earning income from multiple sources.
Who Needs to Pay Advance Tax?
You must pay advance tax if your total tax liability after adjusting TDS exceeds ₹10,000 in a financial year.
- Business owners
- Freelancers and consultants
- Professionals such as doctors, lawyers, and chartered accountants
- Individuals earning rental income
- Taxpayers earning capital gains
- Interest income from deposits or investments
Who is Not Required to Pay Advance Tax?
- Salaried individuals whose entire tax liability is covered under TDS.
- Senior citizens aged 60 years or more without business income.
- Taxpayers opting for presumptive taxation under sections 44AD or 44ADA (they can pay the entire advance tax by 15 March).
Advance Tax Due Dates for FY 2025-26 (AY 2026-27)
| Due Date | Advance Tax Payable |
|---|---|
| 15 June 2025 | 15% of total tax liability |
| 15 September 2025 | 45% of total tax liability |
| 15 December 2025 | 75% of total tax liability |
| 15 March 2026 | 100% of total tax liability |
Example of Advance Tax Calculation
Suppose your estimated tax liability for the financial year is ₹1,00,000.
- 15 June: ₹15,000
- 15 September: ₹45,000
- 15 December: ₹75,000
- 15 March: ₹1,00,000
Penalty for Late Payment of Advance Tax
If advance tax is not paid on time, interest may be charged under the following sections of the Income Tax Act:
- Section 234A: Interest for delay in filing income tax return
- Section 234B: Interest for non-payment of advance tax
- Section 234C: Interest for deferment of advance tax installments
How to Pay Advance Tax Online
Advance tax can be paid online through the Income Tax efiling portal using Challan 280.
- Visit the Income Tax efiling portal
- Select ePay Tax
- Choose Advance Tax (Challan 280)
- Select Assessment Year 2026-27
- Enter the tax amount
- Pay through net banking, UPI, or debit card
- Download the challan receipt
Benefits of Paying Advance Tax
- Avoid interest under sections 234B and 234C
- Better tax planning
- Improved financial management
- Smooth income tax return filing
Frequently Asked Questions
Who needs to pay Advance Tax?
You must pay advance tax if your total tax liability after adjusting TDS exceeds ₹10,000 in a financial year. This applies to business owners, freelancers, and individuals with rental or capital gains income.
What is the penalty for missing an advance tax payment?
If advance tax is delayed or short-paid, interest is levied at 1% per month under Sections 234B and 234C of the Income Tax Act.
Are senior citizens exempt from paying advance tax?
Yes, resident senior citizens (aged 60 years or above) who do not have any income from business or profession are entirely exempt from paying advance tax.
