Advance tax is income tax paid in advance — in instalments during the financial year rather than as a lump sum at year-end. If your estimated total tax liability for a financial year exceeds ₹10,000, you must pay advance tax.
Who Must Pay Advance Tax?
Mandatory for:
Exempt from advance tax:
- ▸Salaried individuals if TDS by employer is insufficient (tax liability > ₹10K after TDS)
- ▸Self-employed professionals (doctors, lawyers, freelancers, consultants)
- ▸Business owners, traders, and entrepreneurs
- ▸Investors with capital gains, dividends, or interest income
- ▸Senior citizens (60+ years) who have no business income — exempt from advance tax
- ▸Those with only salary income (employer deducts TDS monthly)
- ▸Those whose total tax liability after TDS ≤ ₹10,000
Advance Tax Payment Schedule FY 2025-26
| Instalment | Due Date | Amount to Pay |
|---|---|---|
| 1st | June 15, 2025 | 15% of estimated annual tax |
| 2nd | September 15, 2025 | 45% (cumulative) |
| 3rd | December 15, 2025 | 75% (cumulative) |
| 4th | March 15, 2026 | 100% (full) |
How to Calculate Advance Tax
- ▸Estimate total income for the year (salary + business + capital gains + rent + other)
- ▸Apply applicable deductions (80C, 80D, HRA, etc.)
- ▸Calculate tax on net taxable income
- ▸Subtract TDS already deducted (or expected to be)
- ▸If remaining tax > ₹10,000 → advance tax applicable
- ▸Pay as per the quarterly schedule above
How to Pay Advance Tax Online
- ▸Visit incometax.gov.in or tin.tin.nsdl.com
- ▸Click "e-Pay Tax" or "Challan 280"
- ▸Select: "0021 — Income Tax (other than companies)" for individuals or "0020 — Corporation Tax" for companies
- ▸Select "Self-Assessment Tax" if filing before assessment, or "Advance Tax" for the appropriate quarter
- ▸Enter PAN, assessment year, amount
- ▸Pay via netbanking, credit card, or UPI
- ▸Save the challan (BSR code and serial number needed for ITR)
Interest for Underpayment
- ▸Section 234C: 1% per month interest for shortfall in quarterly payments
- ▸Section 234B: 1% per month if total advance tax paid < 90% of assessed tax (from April 1 to date of assessment)
- ▸Section 234A: 1% per month for late filing of ITR (separate from advance tax default)
Conclusion
Advance tax planning prevents a large cash outflow at year-end and avoids Section 234B/234C interest. Biswa Corporate Solutions assists clients with advance tax computation, timely payment, and ITR filing — ensuring full tax compliance throughout the year.
