Advance Tax refers to the income tax that should be paid in advance instead of a lump sum at the end of the financial year. It applies to taxpayers whose total tax liability is ₹10,000 or more in a financial year. This system is also known as 'pay-as-you-earn' tax.
Who Needs to Pay Advance Tax?
Salaried Individuals: If your employer deducts TDS but your total tax liability exceeds ₹10,000 after TDS, you must pay advance tax on the remaining amount.
Freelancers and Professionals: Independent professionals such as doctors, lawyers, consultants, and freelancers with taxable income above the threshold must pay advance tax.
Business Owners: Any individual running a business must calculate and pay advance tax if their expected total tax is above ₹10,000.
Senior Citizens (Above 60 Years): Not required to pay advance tax if they do not have income from business or profession.
When to Pay Advance Tax? (Due Dates)
Due Date
Advance Tax Payable
15th June
15% of total tax liability
15th September
45% of total tax liability (cumulative)
15th December
75% of total tax liability (cumulative)
15th March
100% of total tax liability (cumulative)
Example: If your estimated total tax for the year is ₹40,000, then:
You can pay it online via the INCOME TAX portal by selecting Challan 280 under Income Tax (Other Than Companies).
What If You Miss the Deadline?
Section 234B: Interest at 1% per month for shortfall
Section 234C: Interest at 1% per month for deferment of installments
Timely payment helps avoid interest penalties.
Final Words
Advance tax helps spread your tax burden across the year. If you’re unsure, consider tracking your income regularly and seeking proper record-keeping. This avoids last-minute surprises and interest costs.