Advance Tax — Who Must Pay, How to Calculate, and Due Dates for FY 2025-26
Complete guide to advance tax under Section 208: who is liable, how to calculate all four instalments, due dates for FY 2025-26, and Section 234B/234C interest consequences.
Harun Raaj
Chartered Accountant · Harun Raaj & Associates
What Is Advance Tax?
Advance tax is income tax paid during the financial year as you earn — governed by Sections 207-219 of the Income Tax Act, 1961. The principle: "pay as you earn."
Who Must Pay?
Advance tax is mandatory under Section 208 if estimated tax liability exceeds ₹10,000 after TDS.
Exception: Senior citizens (aged 60+) with no business or professional income are exempt under Section 207.
Salaried individuals whose entire tax is covered by employer TDS generally need not pay separately.
Due Dates — FY 2025-26
Presumptive taxation (Section 44AD/44ADA/44AE): All advance tax due in a single instalment by 15 March. This is a key disadvantage of the presumptive scheme.
How to Calculate Advance Tax
- Estimate total income (salary, business, capital gains, interest, rent)
- Deduct applicable deductions (old regime: 80C, 80D, 24(b); new regime: standard deduction only)
- Apply slab rates + surcharge + 4% cess
- Subtract estimated annual TDS
- If result > ₹10,000 → advance tax required
Practical Example — Freelance Consultant, New Regime
- Professional income: ₹18,00,000; Less standard deduction: ₹75,000
- Taxable: ₹17,25,000; Tax + cess at new regime slabs: ₹2,57,400
- Estimated TDS by clients: ₹1,80,000
- Net advance tax: ₹77,400
Schedule: 15 Jun ₹11,610 | 15 Sep ₹23,220 | 15 Dec ₹23,220 | 15 Mar ₹19,350
Consequences of Shortfall
Section 234B — if advance tax paid < 90% of assessed tax: 1% per month interest on shortfall from 1 April of AY to actual payment date.
Section 234C — if any instalment is below the prescribed percentage: 1% per month for 3 months on the shortfall (1 month for the last instalment).
Section 234C does not apply to capital gains occurring after the instalment due date — pay the balance in the next instalment.
How to Pay via Challan 280
- Visit incometax.gov.in → e-Pay Tax → New Payment
- Select Challan 280 → Assessment Year 2026-27
- Type of payment: (100) Advance Tax
- Pay via net banking, UPI, or debit card
- Save the challan — appears in Form 26AS within 3-5 days
Use our Advance Tax Calculator for precise instalment amounts based on your income estimates.
See Also
Frequently Asked Questions
Who is exempt from paying advance tax in India?+
Senior citizens aged 60 and above with no business or professional income are exempt from paying advance tax under Section 207 of the Income Tax Act, 1961. Additionally, salaried individuals whose entire tax liability is covered by employer TDS generally need not pay advance tax separately.
What is the minimum advance tax liability threshold for FY 2025-26?+
Advance tax is mandatory under Section 208 if estimated tax liability exceeds ₹10,000 after TDS. If the net tax liability after deducting estimated TDS is ₹10,000 or less, advance tax payment is not required.
How much advance tax should be paid by 15 September 2025?+
According to the advance tax schedule for FY 2025-26, 45% of the total estimated advance tax must be paid by the second instalment due date of 15 September 2025.
What is the penalty for not paying advance tax on time?+
Section 234B imposes 1% per month interest on shortfall if advance tax paid is less than 90% of assessed tax, calculated from 1 April of the assessment year to the actual payment date. Section 234C imposes 1% per month for 3 months on shortfall in any instalment below the prescribed percentage (1 month for the last instalment).
Can advance tax be paid in a single instalment under presumptive taxation scheme?+
Yes, under presumptive taxation schemes (Section 44AD/44ADA/44AE), all advance tax is due in a single instalment by 15 March, unlike the regular quarterly instalment schedule. This is noted as a key disadvantage of the presumptive scheme.
How do I pay advance tax online using challan 280?+
To pay advance tax via Challan 280: visit incometax.gov.in, select e-Pay Tax → New Payment, choose Challan 280 for the relevant Assessment Year, select payment type (100) Advance Tax, and pay via net banking, UPI, or debit card. The challan will appear in Form 26AS within 3-5 days.
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