Advance Tax Payment: Due Dates, Applicability, and Overview

Under the advance tax system, taxpayers pay their income tax in installments during the financial year instead of making a lump sum payment at the time of filing returns. If your total tax liability for the year exceeds ₹10,000, you are required to pay advance tax.

Advance Tax Due Date

The due date for the fourth installment (covering January to March of FY 2025–26) is 15 March 2026. By this date, taxpayers must ensure that 100% of their total tax liability for the financial year has been paid.

What is Advance Tax?

Advance tax refers to the payment of income tax in parts throughout the financial year, rather than paying it all at once after the year ends. The rules governing advance tax are covered under Sections 207 to 219 of the Income Tax Act.

Taxpayers are expected to estimate their total income at the start of the financial year and calculate the tax payable accordingly. This estimated tax is then paid in specified installments based on due dates set by the Income Tax Department.

Who Should Pay Advance Tax?

As per Section 208 of the Income Tax Act, any taxpayer whose estimated tax liability exceeds ₹10,000 in a financial year must pay advance tax.

Even if tax has already been deducted at source (TDS), advance tax is still required if the remaining tax payable exceeds ₹10,000.

This rule applies to all categories of taxpayers, including salaried individuals, freelancers, and businesses.

Senior citizens aged 60 years or above are exempt from paying advance tax if they do not have income from a business or profession. However, if they earn income from business or professional activities, they are required to pay advance tax like other taxpayers.

Advance Tax Rates and Due Dates for FY 2025–26

The schedule for advance tax payments for FY 2025–26 is as follows:

For Regular Taxpayers

First instalment: On or before 15 June 2025 – 15% of total tax liability
Second instalment: On or before 15 September 2025 – 45% of total tax liability minus tax already paid
Third instalment: On or before 15 December 2025 – 75% of total tax liability minus tax already paid
Fourth instalment: On or before 15 March 2026 – 100% of total tax liability minus tax already paid

Note: Interest under Section 234C will not apply if at least 12% of tax is paid in the first instalment and 36% in the second instalment.

For Taxpayers Under Presumptive Taxation

Freelancers and small business owners opting for presumptive taxation under Sections 44AD and 44ADA are required to pay advance tax as follows:

On or before 15 March 2026 – 100% of the total advance tax

They also have the option to pay the full amount by 31 March. However, taxpayers under Section 44AE must follow the regular four-instalment schedule as prescribed.

Benefits of Paying Advance Tax

Paying advance tax allows taxpayers to estimate their income in advance and plan their finances accordingly.

Early calculation of income helps in better tax planning and may reduce the overall tax burden.

Timely payment ensures compliance with tax laws and helps avoid penalties or additional charges.

Consequences of Short Payment or Non-Payment

If advance tax is not paid or is insufficient, interest may be charged under Section 234B.

As per this provision, at least 90% of the total tax liability should be paid through advance tax or TDS/TCS by 31 March. Failure to meet this requirement results in interest at 1% per month on the outstanding amount.

Interest on Advance Tax Instalments (Section 234C)

If advance tax instalments are not paid on time or fall short of the required amount, interest is charged at 1% per month. The calculation depends on the shortfall and the specific instalment due date:

If the tax paid by 15 June is less than 15% of the total liability, interest at 1% per month is charged for 3 months on 15% of the tax amount minus the tax already paid before 15 June.

If the tax paid by 15 September is less than 45% of the total liability, interest at 1% per month is charged for 3 months on 45% of the tax amount minus the tax already paid before 15 September.

If the tax paid by 15 December is less than 75% of the total liability, interest at 1% per month is charged for 3 months on 75% of the tax amount minus the tax already paid before 15 December.

If the tax paid by 15 March is less than 100% of the total liability, interest at 1% per month is charged for 1 month on the remaining amount after adjusting tax already paid before 15 March.

How to Calculate Advance Tax

Follow these steps to estimate your advance tax liability and instalment amounts:

Step 1: Review your income from previous financial years.

Step 2: Estimate whether your current year’s income will increase or decrease compared to earlier years.

Step 3: Account for all eligible deductions and exemptions.

Step 4: Calculate your total taxable income.

Step 5: Determine your tax liability using the applicable tax regime.

If your total tax liability for the year exceeds ₹10,000, you are required to pay advance tax.

Basic Calculation Structure

Gross Total Income
Minus deductions under Chapter VI-A
Equals Net Total Income

Tax liability on net income
Add surcharge (if applicable)
Add health and education cess

This gives the Gross Tax Liability

From this, subtract TDS/TCS already paid
The remaining amount is your Net Tax Liability

Advance tax is then paid in instalments as follows:
15% by June
45% by September
75% by December
100% by March

This step-by-step approach helps ensure accurate tax planning and timely payments.

How to Pay Advance Tax Online

You can pay advance tax online through the Income Tax e-filing portal either without logging in or by logging into your account. Here’s a clear step-by-step guide for both methods:

Pay Advance Tax Without Logging In

Step 1: Visit the Income Tax e-filing portal.

Step 2: On the homepage, locate the ‘Quick Links’ section and click on ‘e-Pay Tax’. You can also search for it in the search bar.

Step 3: Enter your PAN, confirm it, and provide your mobile number, then click ‘Continue’.

Step 4: Enter the 6-digit OTP received on your mobile and proceed.

Step 5: Select ‘Income Tax’ and click ‘Proceed’.

Step 6: Choose:

• Assessment Year: 2026–27
• Type of Payment: Advance Tax (100)
  Then click ‘Continue’.

Step 7: Enter the required tax details.

Step 8: Select your payment method and bank, then click ‘Continue’.

Step 9: Review the challan details and click ‘Pay Now’ (you can edit if needed).

Step 10: After payment, an acknowledgement receipt will be generated. Save it for future reference.
You will need the BSR code and challan serial number while filing your income tax return.

Pay Advance Tax by Logging into the Income Tax Portal

Step 1: Visit the e-filing portal and log in using your PAN (user ID) and password.

Step 2: Navigate to e-File > e-Pay Tax.

Step 3: Click on ‘New Payment’ on the top right.

Step 4: Select ‘Income Tax’ (this includes advance tax and self-assessment tax) and click ‘Proceed’.

Step 5: Choose:

• Assessment Year: 2026–27
• Minor Head: Advance Tax (100)

Step 6: Enter tax details such as tax amount, surcharge, cess, and interest (if any).

Step 7: Select the payment mode and click ‘Pay Now’.

Step 8: Accept the terms and complete the payment.

Important Tip

Always download and keep a copy of the challan receipt after payment. It serves as proof of tax payment and is required while filing your income tax return.

Advance Tax Calculation – Illustration

Let’s understand how advance tax is calculated with a practical example:

Scenario:
Ajay is a freelancer (interior decorator). For FY 2025–26, he estimates his income and expenses as follows:

Step 1: Estimate Income

Income from Profession

• Gross Receipts: ₹20,00,000
• Less: Expenses: ₹12,00,000
• Net Professional Income: ₹8,00,000

Income from Other Sources

• Interest from Fixed Deposit: ₹10,000

Gross Total Income: ₹8,10,000

Step 2: Claim Deductions

Under Section 80C

• PPF Contribution: ₹40,000
• LIC Premium: ₹25,000
• Total 80C Deduction: ₹65,000

Under Section 80D

• Medical Insurance Premium: ₹12,000

Total Deductions: ₹77,000

Total Taxable Income: ₹7,33,000

Step 3: Calculate Tax Liability

• Income Tax: ₹59,100
• Add: Health & Education Cess @ 4%: ₹2,364

Gross Tax Liability: ₹61,464

• Less: TDS (already deducted): ₹30,000

Net Advance Tax Payable: ₹31,464

Since this exceeds ₹10,000, Ajay is required to pay advance tax.

Step 4: Advance Tax Instalments

Due Date	% of Tax Payable	Amount (₹)
15th June	15%	4,700
15th September	45%	9,400
15th December	75%	9,400
15th March	100%	7,900

(Each instalment adjusts the tax already paid in previous instalments.)

Important Notes

• This calculation is done under the old tax regime, as deductions under Section 80C and 80D are considered.
• If the total tax liability (after TDS/TCS) does not exceed ₹10,000, advance tax is not applicable.

How to Use the Challan Correction Feature

If you have made an error while paying advance tax using Challan ITNS 280, you can correct it online through the Income Tax e-filing portal by following these steps:

Step-by-Step Process

Step 1: Log in to the Income Tax e-filing portal using your PAN (User ID) and password.

Step 2: Go to the ‘Services’ tab and select ‘Challan Correction’.

Step 3: Click on ‘Create Challan Correction Request’.

Step 4: Choose the type of correction you want to make, such as:

• Assessment Year
• Major Head
• Minor Head

Step 5: Enter either:

• Assessment Year, or
• Challan Identification Number (CIN)

Step 6: Based on your selection, view the list of challans or specific CIN details. Select the challan you want to correct.

Step 7: Enter the correct details carefully.

Step 8: Verify the correction using any of the following methods:

• Aadhaar OTP
• Digital Signature Certificate (DSC)
• Electronic Verification Code (EVC) via net banking, Demat account, or bank account

Step 9: After successful verification, you will receive a confirmation message along with a Transaction ID. Save this ID to track your correction request status.

Conclusion

Paying advance tax on time is essential to stay compliant and avoid penalties. Failure to pay or short payment can attract interest under Sections 234B and 234C at 1% per month.

On the other hand, if you pay excess advance tax, you can claim a refund while filing your income tax return. Proper planning and timely payments help ensure smooth tax compliance and better financial management.

Disclaimer: The content on this website is for informational purposes only and does not constitute legal, financial, or professional advice. Please consult qualified experts before acting on any information. K M GATECHA & CO LLP accepts no liability for errors, omissions, or outcomes from the use of this content. This site is not an advertisement or solicitation.

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