What Is Advance Tax and Why Is It Mandatory?
Advance tax is income tax paid during the financial year in quarterly installments instead of a lump sum payment at the year-end. It is based on the principle of "pay as you earn" and applies to all taxpayers whose estimated tax liability exceeds ₹10,000 in a financial year after accounting for TDS.
The Income Tax Act mandates advance tax payment in four installments on or before 15 June, 15 September, 15 December and 15 March of the financial year. Each installment must be a specified percentage of the total estimated tax liability.
Failure to pay advance tax on time attracts interest penalties under Section 234B (for overall shortfall) and Section 234C (for installment-wise shortfall) at 1% per month or part thereof.
Advance tax is applicable to self-employed individuals, business owners, professionals (doctors, lawyers, consultants), freelancers, investors with capital gains, and anyone with income not subject to adequate TDS.
Salaried individuals whose employer deducts TDS adequately to cover their tax liability are generally not required to pay advance tax. However, if they have additional income from house property, capital gains, or other sources, advance tax may apply.
Taxvio helps individuals and businesses accurately estimate tax liability, calculate installments, generate Challan 280, make payments and track due dates across India — Khatauli, Muzaffarnagar, Meerut, Noida, Delhi NCR and Mumbai.
Advance Tax Due Dates and Installment Percentages
Advance tax must be paid in four installments during the financial year. Here are the due dates and cumulative percentages of total tax liability to be paid by each date.
| Installment | Due Date | Cumulative % | Installment % | Example (₹1,00,000 tax) |
|---|---|---|---|---|
| 1st Installment | On or before 15 June | 15% | 15% | ₹15,000 |
| 2nd Installment | On or before 15 September | 45% | 30% | ₹30,000 |
| 3rd Installment | On or before 15 December | 75% | 30% | ₹30,000 |
| 4th Installment | On or before 15 March | 100% | 25% | ₹25,000 |
Important Note: The percentages shown are cumulative. For example, by 15 September, you must have paid 45% of your total tax liability (15% in June + 30% in September). If 15 June, 15 September, 15 December or 15 March falls on a holiday, the due date is the next working day.
Who Is Required to Pay Advance Tax?
Self-Employed & Freelancers
Consultants, freelancers, contractors and gig workers whose income is not subject to TDS or where TDS is insufficient.
Business Owners
Proprietorships, partnerships, LLPs and companies with business income and estimated tax liability exceeding ₹10,000.
Professionals (Doctors, Lawyers, CAs)
Professionals receiving fees where clients may not deduct TDS or TDS is lower than actual tax liability.
Investors with Capital Gains
Individuals earning capital gains from sale of shares, mutual funds, property or other assets during the financial year.
Rental Income Recipients
Individuals earning rental income from house property where TDS is not deducted or is insufficient to cover tax liability.
Salaried with Additional Income
Salaried individuals with other income sources (rent, interest, capital gains) where employer TDS does not cover total tax liability.
Exemption: Senior citizens (age 60 years or above) who do not have income from business or profession are exempt from paying advance tax. However, they must pay any tax due before filing their ITR.
Interest Penalties for Late or Short Payment of Advance Tax
Missing advance tax deadlines or paying less than required attracts automatic interest charges under Section 234B and Section 234C. These are calculated during ITR filing and added to your tax liability.
Interest on Default in Payment of Advance Tax
Applicable When: Total advance tax paid during the year is less than 90% of the assessed tax.
Interest Rate: 1% per month or part of month.
Period: From 1st April of the assessment year (next FY) till the date of determination of income (ITR filing date).
Calculation Base: Shortfall amount (assessed tax - advance tax paid).
📌 Example:
Total tax liability: ₹1,00,000 | Advance tax paid: ₹70,000 | ITR filed: 31 July
Interest 234B: (₹1,00,000 - ₹70,000) × 1% × 4 months (Apr-Jul) = ₹1,200
Interest for Deferment of Advance Tax Installments
Applicable When: Advance tax paid by any installment due date is less than the required percentage of assessed tax.
Interest Rate: 1% per month or part of month.
Period: Calculated installment-wise from each due date till the next installment date or 31st March, whichever is earlier.
Calculation Base: Installment-wise shortfall.
📌 Example:
Total tax: ₹1,00,000 | Required by 15 Sep: ₹45,000 | Paid: ₹30,000
Shortfall: ₹15,000
Interest 234C: ₹15,000 × 1% × 3 months (Sep-Dec) = ₹450
Total Interest: Section 234B and 234C can apply simultaneously. The total interest burden can significantly increase if advance tax is not paid or is paid late. Proper planning and timely payment are essential.
How to Calculate Advance Tax Liability
Advance tax calculation involves estimating your total income, computing tax liability, deducting TDS and dividing the balance into installments. Here's the step-by-step process.
- 1
Estimate Total Income for the Financial Year
Sum up all sources — salary (if not fully covered by TDS), business income, professional fees, capital gains, house property income, interest income and other sources. Use previous year's ITR, current year projections, and actual receipts till date.
- 2
Calculate Gross Total Income
Add all income heads. Deduct losses (if any) under the same head or from other heads as per Income Tax Act provisions (e.g., house property loss from other income).
- 3
Claim Deductions Under Chapter VI-A
Deduct eligible deductions — Section 80C (PPF, ELSS, LIC, tuition fees), 80D (health insurance), 80G (donations), NPS (80CCD(1B)), home loan interest under 24(b), standard deduction (for salary) and other applicable deductions.
- 4
Compute Taxable Income
Gross Total Income - Total Deductions = Taxable Income. Round off to nearest ₹10 as per Income Tax rounding rules.
- 5
Apply Tax Slabs and Calculate Tax
Apply the applicable income tax slab rates (old regime or new regime) to taxable income. Add surcharge (if applicable) and Health & Education Cess (4% on tax + surcharge).
- 6
Deduct TDS and Other Tax Credits
Subtract TDS already deducted by employers/clients, TCS collected, and any relief under Section 89 or 90/91 (foreign tax credit). The balance is your advance tax liability.
- 7
Divide Into Installments
If advance tax liability exceeds ₹10,000, divide as per the installment schedule: 15% by 15 June, 30% by 15 Sep, 30% by 15 Dec, 25% by 15 March (cumulative: 15%, 45%, 75%, 100%).
Pro Tip: Advance tax is based on estimated income. If your income increases or decreases during the year, you can adjust subsequent installments accordingly. However, ensure total payments meet the 90% threshold by March 15 to avoid Section 234B interest.
How to Pay Advance Tax Online
Advance tax is paid online through the Income Tax e-payment portal using Challan 280. Here's the step-by-step process.
Step-by-Step Payment Guide
- Visit the Income Tax e-payment portal: https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
- Select Challan 280 (Income Tax on Companies / Income Tax Other Than Companies).
- Select Tax Applicable: (0021) Income Tax (Other than Companies).
- Select Type of Payment: (100) Advance Tax.
- Enter your PAN, assessment year, address, email and mobile number.
- Enter the amount you want to pay (installment amount).
- Select Mode of Payment: Net Banking / Debit Card / NEFT/RTGS.
- Click Proceed and complete payment through your bank.
- After successful payment, download the challan counterfoil showing BSR code, challan serial number, date and amount.
- Verify payment reflection in Form 26AS / AIS within 7–10 days.
Important: Keep the challan counterfoil safe. You will need the BSR code and serial number while filing ITR to claim credit for advance tax paid. If payment does not reflect in Form 26AS, you can manually enter challan details in your ITR.
Documents Required for Advance Tax Calculation
For Tax Liability Calculation
- ✓PAN card
- ✓Previous year ITR acknowledgement
- ✓Salary slips / salary certificate (if applicable)
- ✓Business income and expense records
- ✓Professional receipts and fee details
- ✓Capital gains computation (property / stock sale)
- ✓House property rent receipts or rental agreement
- ✓Interest certificates (FD, savings account, bonds)
For Deduction Claims & Installment Planning
- ✓Investment proofs (PPF, ELSS, LIC, NSC) for Section 80C
- ✓Health insurance premium receipts for Section 80D
- ✓Home loan interest certificate for Section 24(b)
- ✓Donation receipts for Section 80G
- ✓NPS contribution statements for Section 80CCD(1B)
- ✓Form 16 / 16A (TDS certificates from employers/clients)
- ✓Estimated income and expense projections for current FY
- ✓Bank account details for challan payment
Taxvio's Advance Tax Calculation Process
Our structured approach ensures accurate liability calculation, optimal installment planning and timely payment reminders to avoid interest penalties.
Income & Document Review
We collect and review your income documents, previous year ITR, salary details, business records, capital gains, rental income and investment proofs.
Tax Liability Estimation
We estimate your total income for the current FY, apply applicable deductions (80C, 80D, etc.), compute taxable income and calculate tax using old or new regime (whichever is beneficial).
TDS Adjustment & Net Liability
We deduct TDS already paid (from Form 16/16A and estimated future TDS) to arrive at your net advance tax liability.
Installment Calculation
If liability exceeds ₹10,000, we calculate the exact amount to be paid in each installment (15%, 45%, 75%, 100%) and provide you with a payment schedule.
Challan Generation & Payment Assistance
We prepare Challan 280 with all required details and guide you through the online payment process. We can also make payments on your behalf with authorization.
Payment Verification & Due Date Reminders
We verify payment reflection in Form 26AS/AIS and maintain your challan records. We send automated reminders before each installment due date.
Estimate Your Advance Tax Service Fee
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Real Stories from Our Clients
"I run a small business and was confused about advance tax. Taxvio calculated my liability, sent me reminders for all 4 installments, and helped me avoid penalties. Very professional service."
Rajesh Kumar
Khatauli
"As a doctor with clinic income, I was paying hefty interest penalties every year. Taxvio helped me plan advance tax properly and saved me ₹25,000 in interest charges this year."
Dr. Priya Sharma
Muzaffarnagar
"Sold property and had huge capital gains. Taxvio calculated my advance tax accurately, helped me pay in installments, and ensured I had no interest burden during ITR filing."
Amit Verma
Noida
Advance Tax Calculation Services Across India
Taxvio is based in Khatauli, Muzaffarnagar, Uttar Pradesh and provides advance tax calculation, installment planning, challan generation and payment assistance to self-employed individuals, businesses and professionals in Meerut, Noida, Delhi NCR, Ghaziabad, Mumbai and across India through online support.
Frequently Asked Questions — Advance Tax
What is advance tax and who needs to pay it?+
What are the advance tax due dates for FY 2024-25?+
What happens if I don't pay advance tax?+
Can I pay advance tax in a lump sum instead of installments?+
How do I pay advance tax online?+
Can salaried employees pay advance tax?+
Is advance tax calculated on gross income or net income?+
What if I overpay advance tax?+
Can advance tax be revised if income changes during the year?+
Do senior citizens need to pay advance tax?+
Avoid Interest Penalties
Calculate & Pay Advance Tax On Time
Don't lose money to avoidable interest penalties. Taxvio provides accurate advance tax calculation, installment planning, challan generation and automated reminders. Save thousands in Section 234B and 234C interest. Starting ₹999.