## 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

| Instalment | Due Date | Cumulative % to Pay |
|---|---|---|
| 1st | 15 June 2025 | 15% |
| 2nd | 15 September 2025 | 45% |
| 3rd | 15 December 2025 | 75% |
| 4th | 15 March 2026 | 100% |

> **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

1. Estimate total income (salary, business, capital gains, interest, rent)
2. Deduct applicable deductions (old regime: 80C, 80D, 24(b); new regime: standard deduction only)
3. Apply slab rates + surcharge + 4% cess
4. Subtract estimated annual TDS
5. 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

1. Visit incometax.gov.in → e-Pay Tax → New Payment
2. Select **Challan 280** → Assessment Year 2026-27
3. Type of payment: **(100) Advance Tax**
4. Pay via net banking, UPI, or debit card
5. Save the challan — appears in Form 26AS within 3-5 days

Use our [Advance Tax Calculator](/tools/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](https://www.harunraaj.com/services/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

- [Advance Tax: Due Dates, Calculation, and Penalty for AY 2025-26](https://www.harunraaj.com/blog/advance-tax-due-dates-2025-26)
- [Late ITR Filing Penalty for AY 2026-27 — Section 234F, 234A, and 234B Explained](https://www.harunraaj.com/blog/late-itr-filing-penalty-ay-2026-27)
- [TDS Rates and Sections for FY 2025-26 — Complete Reference Guide](https://www.harunraaj.com/blog/tds-rates-sections-fy-2025-26)

Canonical: https://www.harunraaj.com/blog/advance-tax-calculation-payment-fy-2025-26