Advance Tax: Who Must Pay, Due Dates and How to Calculate

Advance tax means paying your income tax during the year, as you earn, instead of in one lump sum at the end. It applies to businesses, professionals and even salaried people who have significant other income.

Note: the Income-tax Act, 2025 has replaced the Income-tax Act, 1961 from 1 April 2026. Section numbers have changed, but the concepts explained here continue. Always check the provisions that apply to your financial year.

Who needs to pay advance tax?

Anyone whose estimated tax liability for the year, after TDS, is above the threshold set by law. This commonly includes:

• Business owners and companies
• Freelancers and professionals
• Salaried people with rental income, capital gains or interest

Resident senior citizens without business income are generally exempt.

Instalment due dates

Taxpayers under presumptive taxation for business or profession can pay the whole amount in one instalment by 15 March.

How to calculate

1. Estimate total income for the year from all sources.
2. Subtract deductions available under your chosen tax regime.
3. Compute tax on the estimated income.
4. Subtract TDS and TCS expected for the year.
5. Pay the balance in instalments by the due dates.

Interest for default

• Interest for deferment of instalments if you pay less than required by each due date.
• Interest for default if the total advance tax paid is less than the prescribed percentage of the assessed tax.

Tips

• Review income before each instalment and adjust for one-off gains, like selling shares or property.
• Keep challan receipts; they are needed when filing the return.

Get your estimate right with our taxation services and ITR filing.

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Frequently Asked Questions

Q1. Do salaried people pay advance tax?

Only if they have other income that pushes their tax, after TDS, above the threshold.

Q2. Can I pay advance tax online?

Yes, through the income tax e-pay tax facility.

Q3. What if I overpay advance tax?

The excess is refunded, with interest where applicable, after the return is processed.

Q4. Is advance tax payable on capital gains?

Yes, in the instalment following the gain, to avoid interest.