Advance Tax Payment Under explained: this guide covers what Advance Tax Payment Under means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Advance tax is income tax paid in instalments during the Tax Year rather than as a lump sum at year-end. Under ITA 2025, any taxpayer whose estimated tax liability for the Tax Year exceeds Rs. 10,000 (after TDS credit) must pay advance tax. This prevents large end-of-year tax payments and associated interest.
Who Must Pay Advance Tax?
- Individuals, HUFs, firms, LLPs, companies with estimated tax liability > Rs. 10,000
- Resident senior citizens (60+) are exempt from advance tax if they have no income from business/profession
- Presumptive taxation (44AD/44ADA) taxpayers: single instalment by 15 March
Advance Tax Instalment Schedule
| Instalment | Due Date | Cumulative % of Tax Payable |
|---|---|---|
| 1st Instalment | 15 June | At least 15% |
| 2nd Instalment | 15 September | At least 45% |
| 3rd Instalment | 15 December | At least 75% |
| 4th Instalment | 15 March | 100% |
Computation of Advance Tax
- Estimate total income for the Tax Year
- Compute tax at applicable rates (including surcharge + cess)
- Deduct expected TDS for the year
- = Net advance tax liability
- Pay as per instalment schedule above
Interest for Short Payment / Default
Section 234B — Non/Short Payment of Advance Tax
If advance tax paid by 31 March is less than 90% of assessed tax, interest @ 1% per month applies on the shortfall from 1 April to date of actual payment. Calculated on rounded amount.
Section 234C — Deferment of Instalments
If any specific instalment is short-paid:
- For 15 June shortfall: 1% per month for 3 months on 15% of tax
- For 15 September shortfall: 1% per month for 3 months
- For 15 December shortfall: 1% per month for 3 months
- For 15 March shortfall: 1% per month for 1 month
Challan for Advance Tax
Advance tax is paid via ITNS 280 challan, selecting the appropriate tax year and code (100 = advance tax). Payment can be made online through the Income Tax e-filing portal or bank branches.
Advance Tax for Capital Gains and Windfalls
Capital gains arising after 15 December are required to be paid as a single instalment with the 15 March instalment — no penalty for treating them as single-instalment. VDA income, lottery income, and unexpected gains should be included in the remaining instalment.
Self-Assessment Tax
If any tax remains unpaid after 31 March (after advance tax and TDS), it becomes self-assessment tax, payable before filing ITR. Interest under 234A (late filing) and 234B applies.
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