Under the Indian Income Tax Act, 1961, tax compliance follows the principle of “Pay as You Earn”. If your estimated net tax liability for a financial year (after accounting for TDS and TCS credits) is ₹10,000 or more, paying tax at the time of filing your annual ITR is not sufficient. You are legally required to deposit advance tax across designated quarterly installments.
Failing to pay advance tax or deferring payments results in mandatory, compounding interest penalties under Section 234B (1% per month for shortfall) and Section 234C (1% per month for deferment).
Here is the complete operational guide to advance tax installments, calculation formulas, and penalty avoidance.
Calculate Your Advance Tax Liability
Do not risk manual estimation errors. Use our Free Advance Tax Calculator to determine your exact quarterly payable amounts after TDS deductions and Section 87A rebates.
Advance Tax Installment Schedule (Individual, Corporate & LLPs)
For all corporate assesses and non-corporate taxpayers (salaried individuals with side business/capital gains, professionals, partnerships, and LLPs):
| Installment Due Date | Statutory Cumulative Percentage Payable | How to Compute |
|---|---|---|
| On or before June 15th | 15% of estimated net tax liability | Estimated annual tax × 15% - TDS/TCS |
| On or before September 15th | 45% of estimated net tax liability | Estimated annual tax × 45% - Tax already paid |
| On or before December 15th | 75% of estimated net tax liability | Estimated annual tax × 75% - Tax already paid |
| On or before March 15th | 100% of estimated net tax liability | Estimated annual tax × 100% - Tax already paid |
Special Relief for Section 44AD / 44ADA Presumptive Taxpayers:
Freelancers and small businesses opting for presumptive taxation are exempt from the 4-quarter schedule. They can deposit 100% of their advance tax in a single installment on or before March 15th.
Senior Citizen Exemption under Section 207
Senior citizens resident in India enjoy a complete exemption from advance tax obligations if:
- They are aged 60 years or above at any time during the financial year.
- They do not have any income chargeable under the head “Profits and Gains of Business or Profession” (PGBP).
Senior citizens whose income comprises exclusively pension, interest on fixed deposits, rental income, and capital gains can pay their entire tax at the time of filing their ITR before July 31st without incurring Section 234B/234C interest penalties.
Decoding Interest Penalties: Section 234C & Section 234B
1. Section 234C: Penalty for Deferment of Installments
Section 234C penalizes you if you pay less than the statutory percentage in any given quarter:
- June 15th: If tax paid is less than 12% of final tax (statutory buffer of 3%), interest is charged @ 1% per month for 3 months on the shortfall below 15%.
- September 15th: If tax paid is less than 36% of final tax (statutory buffer of 9%), interest is charged @ 1% per month for 3 months on the shortfall below 45%.
- December 15th: If tax paid is less than 75%, interest is charged @ 1% per month for 3 months on the shortfall below 75%.
- March 15th: If tax paid is less than 100%, interest is charged @ 1% for 1 month on the shortfall below 100%.
2. Section 234B: Penalty for Short-Payment (< 90%)
If by the end of the financial year (March 31st), your cumulative advance tax + TDS/TCS paid is less than 90% of your assessed tax, interest @ 1% per month (or part of a month) is charged under Section 234B starting from April 1st of the Assessment Year until the date of actual payment.
Advance Tax on Unexpected Capital Gains or Lottery Winnings
What happens if you sell a property, redeem mutual funds, or book stock market profits in February? How could you have paid advance tax for that in June or September?
The law provides a specific safeguard under the proviso to Section 234C:
- If a shortfall occurs due to sudden capital gains, speculative gains (lottery/games), or new business income, no Section 234C penalty is levied provided you pay the full remaining tax in the subsequent installment dates.
- If the capital gain occurred after March 15th, you must deposit the tax on or before March 31st to escape interest.
How to Pay Advance Tax Online (Step-by-Step)
- Visit the official e-Filing Income Tax portal (
eportal.incometax.gov.in). - Navigate to e-Pay Tax under Quick Links.
- Enter your PAN / TAN and confirm via mobile OTP.
- Select Income Tax and click Proceed.
- Choose Assessment Year (AY 2026-27 for FY 2025-26).
- Under Type of Payment, strictly select Advance Tax (100).
- Enter the tax breakdown under Tax, Surcharge, and Cess.
- Complete payment via Net Banking, Debit Card, RTGS/NEFT, or UPI. Download the generated Challan Form (CRN / BSR Code / Challan No.) for your records.
Frequently Asked Questions (FAQs)
What if my salary already has TDS deducted by my employer?
If your employer deducts sufficient TDS covering your full salary income, your net advance tax liability is zero. However, if you have substantial interest from bank FDs, dividend income, or rental income that you did not disclose to your employer, you must personally calculate and pay advance tax on those supplementary incomes if the net tax exceeds ₹10,000.
Can I pay advance tax after March 15th?
Any tax paid on or before March 31st of the financial year is legally treated as advance tax under Section 211(1). However, delaying past March 15th will attract 1% interest for 1 month under Section 234C.