The final deadline to pay advance tax for FY 2025–26 is March 15. Taxpayers whose total tax liability exceeds Rs 10,000 after adjusting TDS are required to pay advance tax during the financial year instead of paying the entire amount at the time of filing their income tax return.
Missing this deadline can lead to interest penalties, which many taxpayers often overlook. As the last instalment date approaches, it is important to check whether you are required to pay advance tax and ensure the payment is made on time.
What is advance tax?
Advance tax is often referred to as the “pay-as-you-earn” tax system. Under this system, taxpayers are required to pay their estimated tax liability in instalments during the financial year as they earn income.
This rule applies when a taxpayer’s total tax liability after adjusting TDS exceeds Rs 10,000 in a financial year. Instead of paying the full tax at the end of the year, the tax must be deposited in scheduled instalments.
Who needs to pay advance tax?
Advance tax is applicable to several categories of taxpayers, especially those who have income beyond their regular salary.
Taxpayers who may need to pay advance tax include:
- Salaried individuals who earn additional income such as rent, interest, capital gains, or freelance income
- Freelancers and consultants
- Professionals such as doctors, lawyers, and chartered accountants
- Business owners
- Any taxpayer whose tax liability after TDS exceeds Rs 10,000
However, senior citizens aged 60 years or above are exempt from paying advance tax if they do not have business or professional income.
Advance tax instalment schedule
Advance tax is typically paid in four instalments during the financial year.
The due dates are:
- June 15: At least 15% of total tax liability
- September 15: At least 45% (cumulative)
- December 15: At least 75% (cumulative)
- March 15: 100% of the total tax liability
The March 15 deadline is the final opportunity to ensure that the entire advance tax amount has been paid.
What happens if you miss the advance tax deadline?
If advance tax is not paid on time, the Income Tax Department levies interest under specific provisions of the Income Tax Act.
Interest under Section 234C applies if taxpayers delay or fail to pay advance tax instalments as per the schedule.
Interest under Section 234B applies if the taxpayer fails to pay at least 90% of the total tax liability by March 31.
In both cases, the penalty is calculated as 1% interest per month or part of the month on the unpaid tax amount until the liability is cleared.
Advance tax vs normal tax payment: What’s the difference?
The key difference between advance tax and regular tax payment lies in the timing. Advance tax is paid during the financial year in instalments as income is earned. It is meant to reduce the burden of paying a large tax amount at once at the end of the year.
Regular tax payment usually refers to self-assessment tax paid before filing the income tax return, after calculating the final tax liability. In simple terms, advance tax spreads the tax payment across the year, while normal tax payment is typically made after the financial year when filing the return.
How to pay advance tax
Taxpayers can pay advance tax easily through the income tax portal by following these steps:
- Visit the Income Tax e-filing portal
- Click on “e-Pay Tax”
- Select Advance Tax (Challan 100)
- Enter the required details and complete the payment online
Summing up…
Taxpayers whose tax liability after TDS exceeds Rs 10,000 are required to pay advance tax during the financial year. With the final deadline on March 15, failing to pay can attract interest of 1% per month on the unpaid amount. Checking your tax liability early and making the payment on time can help avoid unnecessary penalties.
