Advance Tax Payment: How to Calculate, Pay & Due Dates

Advance tax is the income tax that is paid in advance, rather than at the end of the financial year. This is also known as the ‘pay-as-you-earn’ system, and it applies to income that is not subject to TDS (Tax Deducted at Source). Advance tax is applicable when an individual’s total tax liability exceeds ₹10,000 in a financial year.

 

The purpose of advance tax is to ensure a steady flow of income for the Government of India throughout the year. This early payment of taxes reduces the financial burden on taxpayers. The funds collected by the government are used for development projects and meeting other financial needs. Advance tax becomes necessary when a taxpayer's annual income includes sources other than a regular salary, such as rental income or capital gains.

 

Here are some of the benefits of paying advance tax:

• By paying taxes periodically throughout the year, taxpayers can better manage their cash flow, avoiding large lump-sum payments at the end of the financial year.

• Advance tax allows the government to maintain a steady flow of revenue, which is essential for development.

• It helps taxpayers remain compliant with tax regulations and avoid a last-minute rush during the tax-filing season.

• Organisations can manage their finances more effectively and provide better estimates of the income they have received during the financial year.

• It speeds up the entire process of tax collection.

Refer to the tables below to get a better understanding of the advance tax payment due dates and the total liability for different categories of taxpayers.

Advance Tax Payment Date for Business Owners and Self-Employed Individuals

Advance tax is applicable when the total tax liability of an individual or a business exceeds ₹10,000 in a financial year. This applies to the following:

Salaried individuals

If individuals have additional sources of income such as capital gains, rental income, or interest earned from savings accounts, they are required to pay advance tax on these earnings.

Freelancers and Professionals

Professionals such as doctors, lawyers, or consultants are required to pay advance taxes, as their income does not attract TDS.

Businesses with Profits

Individuals running businesses, regardless of the size of the operation, are required to pay advance taxes on their earnings.

Exceptions

Senior citizens aged 60 or above, who do not have business income, are exempt from paying advance tax. However, if they do earn income from a business, they will be required to pay it.

Here are the steps you can follow to calculate your advance tax:

1. Basic Details

Start by entering your basic details, such as your age and residential status, before moving on to the next step.

2. Income Details

Fill in the details for your income sources:

 

Salary Income

• Basic salary

• HRA received

• Actual rent paid

• Type of residence city (metro/non-metro)

• Any other taxable allowances

   

House Property Income

• For self-occupied property: Interest on borrowed capital

• For let-out property: Rent received, Municipal tax, Interest on borrowed capital

 

Capital Gains

 

Capital gains earned in Q1, Q2, Q3, and Q4

• Short Term Capital Gains (15%)

• Short Term Capital Gains (30%)

• Short Term Capital Gains (as per slab)

• Long Term Capital Gains (10%)

 

• Long Term Capital Gains (20%)

 

 

Business Income

• Regular business profit

• Speculative business profit

 

• Presumptive business profit

 

 

Other Income

• Savings account interest

• Fixed deposit interest

• Domestic dividends

• Any other income

3. Deductions

Now, disclose all your investments and deductions:

 

Investments

Under Section 80C

• ELSS

• EPF

• PPF

• LIC Premium

• Others

 

Under Section 80CCD (1)

• NPS contributions

 

NPS

• Employee contributions to NPS Under Section 80CCD (1B)

• Employer contributions to NPS Under Section 80CCD (2)

 

Medical Deductions

• Made for self and family

• Made for payments

• Made for parents who are senior citizens

 

Other Deductions

• Donations to charity under Section 80G

• Interest on savings deposits under Section 80TTA

• Interest on electric vehicle loans under Section 80EEB

• Interest on education loans under Section 80E

• Deductions under Section 80GG

4. Taxes Paid

Tax Deducted at Source (TDS)

 

Amount paid under TDS

 

Tax Collected at Source TCS

 

Amount paid under TCS

 

Advance Tax

 

Amount paid as advance tax and the date of payment

 5. Total Tax Payable

Once you have entered all the relevant details, you will have a clearer understanding of your tax liability under both the old and new tax regimes, as well as on a quarterly basis. The calculator will show:

• Total Tax Payable

• Instalments

• Tax to be deposited

• Tax credits

• Outstanding amount

• Interest under Section 234C

• Any tax dues

The process to pay your advance tax online is simple. You can complete it easily through the Income Tax Department’s e-filing portal. Here’s a step-by-step guide:

1. Visit the Income Tax Department’s official website

2. Navigate to the ‘Quick Links’ section and click on the ‘e-Pay Tax’ option

3. Enter your PAN details, re-enter them to confirm, provide your mobile number, and click on ‘Continue’

4. Enter the 6-digit OTP sent to your registered mobile number and click on ‘Continue’

5. Select the box labelled ‘Income Tax’

6. Choose the ‘Assessment Year’ as 2025-26 and select the type of payment as Advance Tax (100), then click on ‘Continue’

7. Enter all the relevant tax details

8. Select your preferred payment method and bank, and click on ‘Continue’

9. Review and verify the challan details, then click on ‘Pay Now’

10. Once the payment is made, you will receive an acknowledgement on the screen, which will include the BSR code and the challan serial number

If a taxpayer fails to pay an instalment by the prescribed due date, interest penalties will apply under Sections 234B and 234C of the Income Tax Act, 1961. These penalties are charged for the underpayment or non-payment of advance tax. Additionally, missing an instalment can lead to a greater financial burden later in the financial year.

 

Adjustments can be made in the final instalment, due on 15th March, to correct any inaccuracies in the first three instalments. This allows taxpayers to settle the remaining tax liability and meet the full advance tax requirement, helping avoid any further penalties. Ensuring timely advance payment of income tax will help you avoid interest charges and simplify the process.