Advance Tax — Who Must Pay, How to Calculate, and Due Dates for FY 2025-26
Complete guide to advance tax under Section 208: who is liable, how to calculate all four instalments, due dates for FY 2025-26, and Section 234B/234C interest consequences.
Harun Raaj
Chartered Accountant · Harun Raaj & Associates
What Is Advance Tax?
Advance tax is income tax paid during the financial year as you earn — governed by Sections 207-219 of the Income Tax Act, 1961. The principle: "pay as you earn."
Who Must Pay?
Advance tax is mandatory under Section 208 if estimated tax liability exceeds ₹10,000 after TDS.
Exception: Senior citizens (aged 60+) with no business or professional income are exempt under Section 207.
Salaried individuals whose entire tax is covered by employer TDS generally need not pay separately.
Due Dates — FY 2025-26
Presumptive taxation (Section 44AD/44ADA/44AE): All advance tax due in a single instalment by 15 March. This is a key disadvantage of the presumptive scheme.
How to Calculate Advance Tax
- Estimate total income (salary, business, capital gains, interest, rent)
- Deduct applicable deductions (old regime: 80C, 80D, 24(b); new regime: standard deduction only)
- Apply slab rates + surcharge + 4% cess
- Subtract estimated annual TDS
- If result > ₹10,000 → advance tax required
Practical Example — Freelance Consultant, New Regime
- Professional income: ₹18,00,000; Less standard deduction: ₹75,000
- Taxable: ₹17,25,000; Tax + cess at new regime slabs: ₹2,57,400
- Estimated TDS by clients: ₹1,80,000
- Net advance tax: ₹77,400
Schedule: 15 Jun ₹11,610 | 15 Sep ₹23,220 | 15 Dec ₹23,220 | 15 Mar ₹19,350
Consequences of Shortfall
Section 234B — if advance tax paid < 90% of assessed tax: 1% per month interest on shortfall from 1 April of AY to actual payment date.
Section 234C — if any instalment is below the prescribed percentage: 1% per month for 3 months on the shortfall (1 month for the last instalment).
Section 234C does not apply to capital gains occurring after the instalment due date — pay the balance in the next instalment.
How to Pay via Challan 280
- Visit incometax.gov.in → e-Pay Tax → New Payment
- Select Challan 280 → Assessment Year 2026-27
- Type of payment: (100) Advance Tax
- Pay via net banking, UPI, or debit card
- Save the challan — appears in Form 26AS within 3-5 days
Use our Advance Tax Calculator for precise instalment amounts based on your income estimates.
Frequently Asked Questions
Who is liable to pay advance tax for FY 2025-26?
Any taxpayer — individual, HUF, firm, or company — whose estimated tax liability after TDS exceeds ₹10,000 in a financial year must pay advance tax under Section 208 of the Income Tax Act, 1961. Senior citizens (60+) without income from business or profession are exempt under Section 207.
What are the four advance tax instalment due dates?
For FY 2025-26: 15 June 2025 (minimum 15% of estimated tax), 15 September 2025 (minimum 45% cumulative), 15 December 2025 (minimum 75% cumulative), and 15 March 2026 (100%). Taxpayers under presumptive taxation (Sections 44AD/44ADA/44AE) can pay the full amount in a single instalment by 15 March.
How do I calculate advance tax on salary income?
Estimate your gross salary for the full year, subtract applicable exemptions and deductions (under the chosen regime), compute tax at slab rates, subtract estimated TDS by your employer, and pay the balance as advance tax. If your employer deducts TDS accurately on the full projected salary, no advance tax is needed. Advance tax typically arises from non-salary income (interest, capital gains, rental income) where TDS is insufficient.
What happens if I miss an advance tax instalment?
Interest under Section 234C is charged at 1% per month on the shortfall for each instalment. Additionally, if total advance tax paid by 31 March is less than 90% of assessed tax, interest under Section 234B at 1% per month applies from 1 April until the date of assessment or ITR filing.
Is advance tax required on capital gains that arise mid-year?
Yes, but with relief under the first proviso to Section 234C. If capital gains or other sudden income arises after a particular instalment date, you can include it in the immediately following instalment without attracting Section 234C interest for prior missed instalments on that income.
I'm CA Harun Raaj, Visakhapatnam. If any of this affects you or your business, reach out — I'd be glad to help.
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See Also
Frequently Asked Questions
Who is exempt from paying advance tax in India?+
Senior citizens aged 60 and above with no business or professional income are exempt from paying advance tax under Section 207 of the Income Tax Act, 1961. Additionally, salaried individuals whose entire tax liability is covered by employer TDS generally need not pay advance tax separately.
What is the minimum advance tax liability threshold for FY 2025-26?+
Advance tax is mandatory under Section 208 if estimated tax liability exceeds ₹10,000 after TDS. If the net tax liability after deducting estimated TDS is ₹10,000 or less, advance tax payment is not required.
How much advance tax should be paid by 15 September 2025?+
According to the advance tax schedule for FY 2025-26, 45% of the total estimated advance tax must be paid by the second instalment due date of 15 September 2025.
What is the penalty for not paying advance tax on time?+
Section 234B imposes 1% per month interest on shortfall if advance tax paid is less than 90% of assessed tax, calculated from 1 April of the assessment year to the actual payment date. Section 234C imposes 1% per month for 3 months on shortfall in any instalment below the prescribed percentage (1 month for the last instalment).
Can advance tax be paid in a single instalment under presumptive taxation scheme?+
Yes, under presumptive taxation schemes (Section 44AD/44ADA/44AE), all advance tax is due in a single instalment by 15 March, unlike the regular quarterly instalment schedule. This is noted as a key disadvantage of the presumptive scheme.
How do I pay advance tax online using challan 280?+
To pay advance tax via Challan 280: visit incometax.gov.in, select e-Pay Tax → New Payment, choose Challan 280 for the relevant Assessment Year, select payment type (100) Advance Tax, and pay via net banking, UPI, or debit card. The challan will appear in Form 26AS within 3-5 days.
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