What is Advance Tax?
Advance tax means paying income tax in instalments during the financial year in which income is earned, instead of paying it all at the end. It mainly affects business owners, professionals, freelancers, landlords and investors whose income is not fully covered by TDS.
Who Must Pay Advance Tax?
- Any person whose estimated tax liability for the year, after TDS, is ₹10,000 or more
- Resident senior citizens (60 years or more) without business or professional income are generally exempt
- Salaried employees usually have tax deducted by the employer, but may need to pay advance tax on other income, such as rent, capital gains or interest
Advance Tax Due Dates
For most taxpayers, advance tax is paid in four instalments:
- 15 June: at least 15% of the estimated tax
- 15 September: at least 45% (cumulative)
- 15 December: at least 75% (cumulative)
- 15 March: 100% of the estimated tax
Presumptive taxpayers
Businesses and professionals opting for presumptive taxation can generally pay the entire advance tax in a single instalment by 15 March.
How to Calculate
- Estimate your total income for the year from all sources
- Compute tax under the regime you plan to choose, including surcharge and cess
- Subtract TDS and TCS expected for the year
- If the balance is ₹10,000 or more, pay it in instalments by the due dates
- Review and adjust each quarter as income changes
Capital gains or other one-time income arising during the year should be included in the instalments falling after the income arises.
What if You Pay Late or Less?
Interest is charged for shortfall in instalments and for not paying at least 90% of the tax by the end of the year, generally at 1% per month or part of a month. It is usually cheaper to pay a reasonable estimate on time than to pay everything at the end.
How to Pay
Advance tax is paid online through the income tax e-filing portal using the appropriate challan and selecting advance tax as the payment type. Keep the challan details for your ITR.
Frequently Asked Questions
I am a freelancer with irregular income. What should I do?
Estimate conservatively each quarter and adjust as you go. If you qualify for presumptive taxation, you may be able to pay in one instalment by 15 March.
Does advance tax apply to NRIs?
Yes, if their tax liability in India after TDS crosses the threshold, for example on capital gains or rental income.
Related Services
Talk to a Chartered Accountant
If you want help calculating and planning your advance tax, contact us for detailed guidance.
CA Mayank Agarwal (Chartered Accountants)
Raj Nagar Extension & Indirapuram, Ghaziabad
Phone / WhatsApp: 9718877122 | Email: fcamayankagarwal@gmail.com
This page gives general information for guidance only. Laws, forms, fees and timelines change from time to time and depend on individual facts, so please confirm the current position before acting. See all our service guides.