Advance Tax

Advance Tax Instalment Schedule

Advance tax is paid in four cumulative instalments during the financial year. By June 15: at least 15% of estimated annual tax liability. By September 15: at least 45% cumulative. By December 15: at least 75% cumulative. By March 15: 100% of estimated annual tax. The estimate is based on your projected total income for the year — salary, business income, capital gains, rental income, and other sources — minus TDS already deducted. If your income changes during the year (e.g., you sell property in November), you can revise your advance tax estimate and pay the revised amount in the December or March instalment.

How to Pay Advance Tax

Advance tax is paid using Challan 280 on the Income Tax e-filing portal (incometax.gov.in) or via authorised bank branches. Select "Advance Tax" as the type of payment and assessment year correctly. Payment can be made via net banking, debit card, RTGS/NEFT, or over-the-counter at authorised banks. After payment, the challan details (BSR code, challan serial number, date, and amount) must be entered in your ITR. Advance tax paid appears in Form 26AS under Part C within a few days of payment.

Interest for Non-Payment: Sections 234B and 234C

Section 234B applies when total advance tax paid is less than 90% of the assessed tax. Interest is charged at 1% per month (simple interest) from April 1 of the assessment year to the date of payment of self-assessment tax. For example, if assessed tax is ₹1 lakh and advance tax paid is ₹80,000 (80%), Section 234B interest applies on the ₹20,000 shortfall. Section 234C applies when individual instalments are short-paid: 1% per month for 3 months on the shortfall for June and September instalments, and 1% for 1 month on the December shortfall. No Section 234C interest applies on the March instalment shortfall.

Special Rules for Capital Gains and Freelancers

Capital gains income is unpredictable — you cannot always estimate it at the start of the year. Section 234C provides relief: if capital gains arise after the September 15 instalment due date, the entire capital gains tax can be paid in the remaining instalments without Section 234C interest on the earlier instalments. Similarly, casual income (lottery, horse racing) that arises after an instalment date can be included in subsequent instalments. Freelancers and professionals under Section 44ADA must pay the entire advance tax in one instalment by March 15 — the four-instalment schedule does not apply to them.