Advance Tax Payment Guide — Due Dates, Calculation, and Online Process

What is Advance Tax?

Advance Tax is the income tax paid in instalments during the financial year itself, rather than as a lump sum at the end of the year. It is often called "pay-as-you-earn" tax. If your total tax liability for the year exceeds ₹10,000 (after TDS deductions), you are required to pay advance tax.

This applies to all taxpayers — salaried individuals (with income beyond salary), self-employed professionals, freelancers, and businesses. Senior citizens (60+ years) who do not have business or professional income are exempt from advance tax.

Who Should Pay Advance Tax?

• Salaried individuals with additional income (rent, capital gains, interest) where total tax liability exceeds ₹10,000
• Freelancers and self-employed professionals — see our freelancer tax guide
• Businesses — proprietorships, partnerships, companies
• Individuals with capital gains from property, shares, or mutual funds
• NRIs with Indian income exceeding the basic exemption limit

Who is Exempt?

• Senior citizens (60+) who do NOT have income from business or profession
• Any taxpayer whose total tax liability (after TDS) is less than ₹10,000

Advance Tax Due Dates

For All Taxpayers (Non-44AD/44ADA)

For Presumptive Income (Section 44AD/44ADA)

Taxpayers opting for presumptive taxation must pay 100% advance tax by 15th March in a single instalment.

How to Calculate Advance Tax

Step 1: Estimate Total Income

Add up all income sources — salary, business/profession, house property, capital gains, and other sources.

Step 2: Claim Deductions

Subtract deductions under Chapter VI-A (80C, 80D, etc.) — check our Section 80C guide for eligible investments.

Step 3: Compute Tax

Apply the applicable tax slab rates (old or new regime) to your net taxable income.

Step 4: Add Surcharge and Cess

Add applicable surcharge and 4% Health & Education Cess.

Step 5: Deduct TDS

Subtract the TDS already deducted/expected to be deducted during the year.

Step 6: Check Threshold

If the remaining tax exceeds ₹10,000, you must pay advance tax.

Example: If your estimated total tax is ₹1,50,000 and TDS of ₹1,00,000 will be deducted, the balance of ₹50,000 should be paid as advance tax in instalments.

How to Pay Advance Tax Online

Step 1: Visit NSDL Portal

Go to NSDL e-Tax Payment.

Step 2: Select Challan 280

Click on Challan No. 280 (Income Tax payment).

Step 3: Fill Details

• Tax Applicable: Select (0021) Income Tax (Other than Companies) or (0020) for companies
• Type of Payment: Select (100) Advance Tax
• Assessment Year: Select the relevant AY (e.g., AY 2026-27 for FY 2025-26)
• PAN: Enter your PAN
• Address and contact details

Step 4: Verify and Submit

Verify the details and submit. You'll be redirected to your bank's net banking portal.

Step 5: Make Payment

Complete the payment through net banking. You can also pay via:

• Debit card
• UPI
• RTGS/NEFT
• Over the counter at authorized bank branches

Step 6: Save Challan Receipt

After payment, a challan receipt (CIN — Challan Identification Number) is generated. Download and save it — you'll need it while filing your ITR.

Alternative: Pay via Income Tax Portal

1. Log in to Income Tax e-filing portal
2. Go to e-Pay Tax → New Payment
3. Select Income Tax → Advance Tax
4. Enter amount and proceed to payment

Interest on Late/Short Payment

Section 234B — Default in Advance Tax

If you pay less than 90% of the total tax as advance tax:

• Interest at 1% per month (simple) on the shortfall
• Calculated from 1st April of the assessment year until the date of actual payment

Section 234C — Deferment of Advance Tax

If you miss or underpay any instalment:

• Interest at 1% per month for 3 months on the shortfall for each instalment
• Calculated on the difference between the amount due and amount paid

Example: If you should have paid ₹45,000 by 15th September but paid only ₹30,000, interest under 234C applies on ₹15,000 at 1% per month for 3 months = ₹450.

Advance Tax for Capital Gains

Capital gains are often unpredictable. The Income Tax Act provides relief:

• If capital gains arise after an instalment due date, the entire capital gains tax can be paid in the remaining instalments
• No interest under Section 234C for such cases, provided tax is paid in the immediately following instalment

Important Tips

1. Overestimate slightly — It's better to pay a little extra (claimable as refund) than underpay and face interest
2. Revise estimates quarterly — Recalculate your expected income before each instalment date
3. Pay before the due date — Interest is charged even for a 1-day delay
4. Use correct assessment year — A common mistake is selecting the wrong AY on the challan
5. Keep challan receipts — Verify that advance tax paid reflects in your Form 26AS and AIS

Frequently Asked Questions

What happens if I don't pay advance tax?

You'll be charged interest under Sections 234B and 234C at 1% per month on the shortfall amount. There's no separate penalty, but the interest can add up significantly.

Can salaried employees pay advance tax?

Yes, salaried employees with additional income sources (freelancing, rental income, capital gains) should pay advance tax if the total tax liability after TDS exceeds ₹10,000.

Is advance tax applicable under the new tax regime?

Yes, advance tax provisions apply equally under both old and new tax regimes. The calculation changes based on the regime's slab rates, but the payment schedule remains the same.

Can I pay advance tax after the due date?

Yes, you can pay advance tax after the due date, but interest under Section 234C will apply. It's still better to pay late than not pay at all, as it reduces interest under Section 234B.

How do I claim credit for advance tax paid while filing ITR?

Enter the challan details (BSR code, date, serial number, amount) in the tax payment schedule of your ITR. The advance tax paid reflects in your Form 26AS and Annual Information Statement (AIS).

Do I need to pay advance tax on fixed deposit interest?

If TDS is deducted on FD interest and your total tax liability after all TDS doesn't exceed ₹10,000, advance tax is not required. But if you have significant FD income and other sources, advance tax may be applicable.

Disclaimer: This guide is for informational purposes only and is not affiliated with the Income Tax Department. Tax rules change frequently — verify current provisions on the official income tax portal.