Advance Tax, Who Pays and When

Paying tax through the year instead of in one lump sum catches many people off guard. Here are the exact FY 2025-26 due dates, exemptions, and how the penalty interest is actually calculated.

Direct Tax

Which ITR Form Applies to You?

New Tax Regime vs Old Tax Regime

TDS, Basics for Individuals

Capital Gains, Rates and Computation

Income from House Property

Advance Tax, Who Pays and When

Deductions under Chapter VI-A

Presumptive Taxation Scheme

Updated Return (ITR-U)

Scrutiny Notices, How to Respond

Advance tax applies if your total tax liability, after TDS, is 10,000 rupees or more, paid in instalments through the year.

Due dates for FY 2025-26

Instalment	Due date	Cumulative percentage owed
First	15 June	15%
Second	15 September	45%
Third	15 December	75%
Fourth	15 March	100%

Presumptive taxpayers pay differently: under Section 44AD or 44ADA, the full 100% is due in one instalment by 15 March, not spread across the year.

Who is exempt entirely: resident senior citizens (60+) with no business or professional income do not need to pay advance tax at all, regardless of the amount owed. This is a resident-only exemption under Section 207, a non-resident senior citizen with identical income still has to pay on the regular schedule.

How the penalty interest is actually calculated

Section 234B (interest for insufficient overall advance tax) charges 1% simple interest per month on the shortfall between what you paid and 90% of your final tax, running from 1 April after the year ends until you settle it. Section 234C (interest for missing a specific instalment) charges 1% per month too, but only for that instalment’s shortfall, and for a short, fixed period, three months for each of the first three instalments, one month for the last.

The practical reason this schedule matters: if less than 90% of your total tax liability is covered by 31 March through advance tax and TDS combined, interest runs at 1% a month on the shortfall, which is exactly the 234B exposure described above.

Sudden, unforeseeable income gets a genuine concession. If you sell a property or receive a large capital gain later in the year, something you genuinely could not have planned for earlier, you are not penalised for missing earlier instalments on that portion. You only need to pay the proportionate advance tax on it by the very next instalment date after the income actually arose.

Overpaying is not wasted money. Any excess advance tax gets refunded once you file, and interest under Section 244A (interest on delayed refunds) accrues in your favour for the time the department holds your money.

Advance tax vs self-assessment tax

Easy to conflate, but they are two different payments. Advance tax is paid during the financial year itself, in instalments, against estimated income before the year even closes. Self-assessment tax is paid after the year ends, at filing time, to cover the gap between your actual final liability and what is already been paid through advance tax and TDS/TCS. Both go through the same payment channel, just a different payment type selected: Advance Tax is Minor Head 100, Self-Assessment Tax is Minor Head 300.

How to actually pay, Challan ITNS 280 via e-Pay Tax

On the income tax e-filing portal, click e-Pay Tax under Quick Links
Enter your PAN and mobile number, verify by OTP
Select Income Tax, then Challan ITNS 280 (a newer 280N variant applies for ITA 2025 filings)
Choose the correct assessment year and payment type, 100 for advance tax, 300 for self-assessment tax
Enter the amount breakup: tax, surcharge, cess
Pay via net banking, debit card, UPI, or RTGS/NEFT
Download the receipt with the CIN (Challan Identification Number), it is needed at return-filing time

FAQs: Advance Tax, Who Pays and When

I am salaried with TDS deducted monthly. Do I need to pay advance tax too?

Usually not if TDS covers your full liability. Extra income like capital gains can still trigger an obligation.

I missed the June instalment. Now what?

Section 234C interest applies for that shortfall, for a fixed three month period, catch up in the next instalment before further interest accrues.

Do I need to be exact with my estimate?

No, a reasonable estimate is fine, adjust in later instalments as things become clearer.

I run a small business under Section 44AD. When exactly do I pay?

All of it, 100%, by 15 March, a single payment rather than four spread out ones.

What if I pay my presumptive scheme advance tax a few days late, on 20 March?

Still counted as advance tax for the year, but Section 234C interest applies for the delay. Pay after 31 March, and both 234B and 234C interest apply.

Does a senior citizen with rental income still qualify for the exemption?

Yes, as long as they have no business or professional income, rental and interest income do not disqualify them.

How exactly is 234B interest calculated?

1% simple interest per month on the shortfall from 90% of your final assessed tax, running from 1 April after the tax year ends until the date you actually pay it.

I sold a property in February and made a large, unplanned capital gain. Do I owe 234C interest on the earlier missed instalments?

No, for genuinely unforeseeable gains, you only need to pay the proportionate tax by the next instalment due after the gain arose, no penalty for the earlier missed portion.

What if I overpay my advance tax?

The excess is refunded after you file, with interest under Section 244A for the period the department held it.

Does dividend income factor into my advance tax planning?

Yes, dividend income above a modest threshold should be included in your total tax estimate for advance tax purposes, it is easy to overlook since it often arrives in small, scattered amounts through the year.

Last updated on 30 July 2026