Advance Tax — When to Pay, How to Calculate & Due Dates 2026
By Parul Singh, GST Practitioner · Tax Payment · Updated June 2026
Table of Contents
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Who Must Pay Advance Tax?
If your tax exceeds ₹10,000 per year and you skip advance tax, Section 234B and 234C interest applies. Advance tax is simply paying your income tax in installments during the year instead of a lump sum at the end. It applies to all taxpayers -- salaried, freelancers, business owners, companies.
Official Reference: Section 208 of the Income Tax Act 1961 mandates advance tax when tax liability exceeds ₹10,000. Sections 234B and 234C prescribe interest for default. Section 211 provides the installment schedule. Rule 40 prescribes the challan (ITNS-280).
Who is exempt from advance tax:
- Salaried employees with no income other than salary (employer deducts TDS)
- Senior citizens (above 60) with no business/profession income
- Taxpayers opting for presumptive taxation (44AD/44ADA) -- pay entire amount by 15th March
📍 Real Example -- Business Owner in Karol Bagh
A trader in Karol Bagh estimates ₹8 lakh total tax for FY 2026-27. His advance tax schedule:
• 15th June: ₹1,20,000 (15%)
• 15th September: ₹2,40,000 (45% cumulative)
• 15th December: ₹2,00,000 (75% cumulative)
• 15th March: ₹2,40,000 (100% cumulative)
Total: ₹8,00,000. If he misses June installment, interest under 234C applies.
• 15th June: ₹1,20,000 (15%)
• 15th September: ₹2,40,000 (45% cumulative)
• 15th December: ₹2,00,000 (75% cumulative)
• 15th March: ₹2,40,000 (100% cumulative)
Total: ₹8,00,000. If he misses June installment, interest under 234C applies.
Advance Tax Payment Schedule
| Due Date | % of Total Tax | For Presumptive (44AD/44ADA) |
|---|---|---|
| 15th June | 15% | Not required |
| 15th September | 45% | Not required |
| 15th December | 75% | Not required |
| 15th March | 100% | 100% due |
⚠️ Common Mistake: For presumptive taxpayers (44AD/44ADA), the entire advance tax can be paid by 15th March. But if you underestimate and pay less than 90% of actual tax, interest under Section 234C applies on the shortfall. Always estimate conservatively -- pay at least 100% of last year's tax to avoid interest.
How to Calculate Advance Tax
- Estimate total income for the financial year
- Compute tax on estimated income (apply rates, slab, cess)
- Subtract TDS already deducted or expected to be deducted
- Subtract any tax credits (MAT credit, foreign tax credit)
- Net tax liability = your advance tax obligation
- Pay as per the schedule above
📍 Real Example -- Freelancer in Nehru Place -- Advance Tax Calculation
A freelance developer in Nehru Place expects ₹20 lakh income this year:
• Estimated tax (old regime): ₹2,40,000
• TDS expected from clients: ₹60,000
• Net advance tax required: ₹1,80,000
Installments:
• June 15: ₹27,000 (15% of ₹1,80,000)
• Sep 15: ₹54,000 (next 30%)
• Dec 15: ₹54,000 (next 30%)
• Mar 15: ₹45,000 (remaining 25%)
• Estimated tax (old regime): ₹2,40,000
• TDS expected from clients: ₹60,000
• Net advance tax required: ₹1,80,000
Installments:
• June 15: ₹27,000 (15% of ₹1,80,000)
• Sep 15: ₹54,000 (next 30%)
• Dec 15: ₹54,000 (next 30%)
• Mar 15: ₹45,000 (remaining 25%)
Interest on Advance Tax Default
| Section | When | Interest Rate |
|---|---|---|
| 234A | Not filing ITR by due date | 1% per month on outstanding tax |
| 234B | Not paying advance tax (or paying less than 90%) | 1% per month on shortfall |
| 234C | Deferment of installment | 1% per month on shortfall per installment |
💡 Pro Tip from Parul: A simple rule: pay advance tax equal to at least 100% of your previous year total tax. This is the safe harbor rule under Section 234C -- if you pay this much, no interest applies even if your actual tax is higher. I help all my clients with advance tax estimates every quarter. Call/WhatsApp: +91 95401 04776
How to Pay Advance Tax
- Login to incometax.gov.in or use your bank's net banking
- Select "e-Pay Tax" → ITNS-280
- Select "Advance Tax" as type
- Fill in assessment year, PAN, amount
- Pay via net banking, UPI, or debit card
- Save the challan receipt -- mention it in your ITR
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Frequently Asked Questions
Is advance tax applicable for salaried employees?
Usually no -- employers deduct TDS on salary. But if you have additional income (rent, interest, capital gains, freelance) and total tax on that exceeds ₹10,000, you must pay advance tax on that additional income.
What if I overpay advance tax?
Excess advance tax is refunded after ITR processing, or you can claim credit against next year's advance tax. However, if the excess exceeds 10% of total tax, you can file Form 30 for refund.
Can I revise advance tax estimates?
Yes, you can revise your estimate any time during the year. Pay the remaining installments based on the revised estimate. If you underestimated earlier, pay the catch-up amount in the next installment plus interest on deferment under Section 234C.
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