Income Tax15 January 20258 min read

Advance Tax Payment 2025-26: Due Dates, Calculation & Penalties

Complete guide to advance tax payment in India. Know quarterly due dates, calculation method, interest penalties under Section 234B and 234C.

advance taxtax payment234B234C

What is Advance Tax?

Advance tax is the income tax paid in installments during the financial year instead of a lump sum at the year-end. It's also called "pay-as-you-earn" tax.

Who Should Pay Advance Tax?

You must pay advance tax if your total tax liability for the year exceeds Rs 10,000 after reducing TDS.

Persons Liable

  • Salaried individuals with other income
  • Self-employed professionals
  • Freelancers
  • Business owners
  • Senior citizens with non-salary income

    • Exempt from Advance Tax

  • Senior citizens (60+) having no business/profession income

    • Advance Tax Due Dates FY 2025-26

    Special Rule for Section 44AD/44ADA

    Taxpayers opting for presumptive taxation can pay entire advance tax by 15th March in one installment.

    Advance Tax Calculation

    Step-by-Step Process

  • Estimate Total Income: Project your income for the full year
  • Calculate Tax: Apply applicable slab rates
  • Add Surcharge and Cess: If applicable
  • Reduce TDS: Subtract TDS already deducted
  • Net Advance Tax: Balance is your advance tax liability

    • Example Calculation

    Quarterly Payment Schedule

    Interest on Late Payment

    Section 234B: Default in Advance Tax Payment

    If you pay less than 90% of your tax liability as advance tax:
  • Interest Rate: 1% per month or part of month
  • Period: From April 1 of assessment year until date of actual tax payment
  • Calculation: On the shortfall amount
    • Example:
  • Total tax liability: Rs 1,00,000
  • Advance tax paid: Rs 80,000 (less than 90%)
  • Shortfall: Rs 20,000
  • Interest for 4 months (Apr-Jul): Rs 20,000 × 1% × 4 = Rs 800

    • Section 234C: Deferment of Advance Tax

    If you don't pay required percentage by each due date:
  • Interest Rate: 1% per month for 3 months
  • Applicable: On shortfall from required payment
    • Interest Calculation Matrix:
    InstallmentDue DateCumulative Tax Payable
    1st15th June 202515% of total tax
    2nd15th September 202545% of total tax
    3rd15th December 202575% of total tax
    4th15th March 2026100% of total tax
    ParticularsAmount
    Estimated Total IncomeRs 15,00,000
    Tax on Income (New Regime)Rs 1,50,000
    Add: 4% CessRs 6,000
    Total Tax LiabilityRs 1,56,000
    Less: TDS DeductedRs 80,000
    Advance Tax PayableRs 76,000
    Due DateCumulative %Amount (Rs 76,000)
    15-Jun-2515%Rs 11,400
    15-Sep-2545%Rs 34,200 (Rs 22,800 additional)
    15-Dec-2575%Rs 57,000 (Rs 22,800 additional)
    15-Mar-26100%Rs 76,000 (Rs 19,000 additional)
    Due DateRequired %Shortfall CalculationInterest Period
    15-Jun15%If paid < 12%3 months
    15-Sep45%If paid < 36%3 months
    15-Dec75%If paid < 75%3 months
    15-Mar100%If paid < 100%1 month

    How to Pay Advance Tax

    Online Payment (Recommended)

  • Visit Income Tax e-Filing Portal
  • Go to e-Pay Tax section
  • Enter PAN
  • Select Challan 280
  • Choose:
    • - Assessment Year (2026-27 for FY 2025-26) - Type of Payment: Advance Tax (100)
  • Select bank and make payment
  • Download challan for records

    • Offline Payment

  • Visit authorized bank branch
  • Fill Challan 280
  • Submit with payment
  • Collect counterfoil

    • Tips to Manage Advance Tax

  • Estimate Conservatively: Slightly overestimate to avoid interest
  • Track Income Monthly: Update estimates as income changes
  • Consider TDS: Higher TDS means lower advance tax
  • Pay Before Due Date: Avoid last-minute rush
  • Keep Challans Safe: Needed for ITR filing and verification

    • Advance Tax for Different Incomes

    Salary Plus Rental Income

  • TDS deducted on salary
  • Pay advance tax on rental income

    • Freelance Income

  • No TDS in many cases
  • Full income subject to advance tax
  • Use Section 44ADA for presumptive taxation

    • Capital Gains

  • Unexpected gains during year
  • Pay advance tax in next quarter
  • Interest calculated from quarter of earning

    • Business Income

  • Estimate based on past trends
  • Adjust for seasonal variations
  • Monthly income tracking recommended

    • Consequences of Non-Payment

    Immediate Consequences

  • Interest under Section 234B and 234C
  • Reduces refund amount (if any)
  • Additional compliance burden

    • In Assessment

  • Interest continues to accrue
  • Added to tax demand
  • Cannot be waived

Frequently Asked Questions

Q: Can I revise my advance tax estimates? A: Yes, you can pay more or less in subsequent quarters based on revised estimates. Q: What if I have only capital gains income? A: Pay advance tax in the quarter when gains are realized. Q: Is advance tax refundable? A: Yes, excess advance tax is refunded with interest @ 6% p.a. Q: Can I pay all advance tax in last quarter? A: Technically yes, but you'll pay 234C interest for earlier quarters.

Conclusion

Proper advance tax planning saves you from interest penalties and ensures smooth tax compliance. Track your income regularly and pay advance tax on time.

Use our Advance Tax Calculator to calculate your quarterly advance tax liability.

Written by

CA Work Desk

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