What advance tax is
Advance tax is the pay-as-you-earn system, instead of paying all your tax at filing time, you pay it in four instalments through the year. It applies to anyone whose tax liability after TDS exceeds ₹10,000 in a financial year, which most often catches freelancers, professionals, and anyone with rental income, capital gains or large interest income that is not fully covered by TDS.
The instalments are cumulative: by each due date you should have paid at least that running percentage of your total advance tax, not that slice on its own.
The instalment schedule (FY 2025-26)
Taxpayers under the presumptive schemes (Sections 44AD or 44ADA) get a simplification, they can pay the entire amount in a single instalment by 15 March.
What happens if you miss an instalment
Section 234C charges interest at 1% per month on the shortfall in each instalment, generally for three months on the first three instalments and one month on the last. Separately, Section 234B charges interest from 1 April of the assessment year if you paid less than 90% of your assessed tax as advance tax during the year. The two can apply together. A small tolerance exists for the first two instalments, paying at least 12% by June and 36% by September avoids 234C interest even though the targets are 15% and 45%.
Who does not need to pay
- Anyone whose tax after TDS is ₹10,000 or less.
- Resident senior citizens (60+) without business or professional income, they can pay any balance in one go before filing.
If your income includes capital gains or other one-off amounts, add the tax on those to the instalment falling due right after the income arises. For freelancers and professionals, our advance tax guide works through the details, and our tax team can manage the instalments for you.
Frequently asked
Who has to pay advance tax?
Anyone whose estimated tax liability for the year, after subtracting expected TDS and TCS, exceeds ₹10,000. This most commonly affects freelancers, professionals, and people with rental income, capital gains, or large interest income that TDS does not fully cover. Salaried people are often covered by salary TDS, but may still owe advance tax on other income.
What are the advance tax due dates?
For FY 2025-26 the cumulative targets are 15% by 15 June, 45% by 15 September, 75% by 15 December, and 100% by 15 March. The percentages are cumulative, so by September you should have paid 45% in total, not an additional 45%. Presumptive taxpayers under 44AD or 44ADA can pay it all in one instalment by 15 March.
What interest applies if I miss an instalment?
Section 234C charges 1% per month on the shortfall in each instalment, typically three months for the first three instalments and one month for the last. Section 234B separately charges 1% per month from 1 April of the assessment year if less than 90% of assessed tax was paid in advance. Both can apply at once, so it pays to keep instalments on track.
Is advance tax calculated after TDS?
Yes. The instalments are computed on your estimated tax minus the TDS and TCS expected to be deducted during the year, and the ₹10,000 threshold is tested on that net figure too. This calculator asks for your expected TDS precisely so it can show the net advance tax you actually need to pay.
Are senior citizens exempt?
Resident senior citizens aged 60 or above who have no income from business or profession are exempt from paying advance tax in instalments. They can pay any tax due in a single payment before filing their return. Senior citizens who do run a business or profession must still pay advance tax like anyone else.