Advace Tax in India
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Who Needs to Pay Advance Tax in India? (FY 2025–26)
Advance tax is an important part of the Indian taxation system where taxpayers pay their income tax in installments during the financial year instead of paying the entire amount at the end of the year.
If your total tax liability exceeds ₹10,000 in a financial year after considering TDS/TCS, you are required to pay advance tax.
This article explains who needs to pay advance tax, the due dates, and how to avoid interest penalties.
What is Advance Tax?
Advance tax is also called “Pay as You Earn Tax.”
Instead of paying the entire tax at the time of filing the Income Tax Return, the taxpayer pays tax in four installments during the financial year.
This helps the government maintain steady revenue flow and prevents taxpayers from facing a large tax burden at the end of the year.
Who Needs to Pay Advance Tax?
Advance tax applies to the following taxpayers:
1. Business Owners and Professionals
Individuals running business or professional activities must pay advance tax if their estimated tax liability exceeds ₹10,000.
Examples:
Traders
Consultants
Freelancers
Professionals like CA, lawyers, doctors
2. Salaried Individuals with Additional Income
Salaried individuals generally have tax deducted through TDS by their employer. However, if they earn additional income such as:
Rental income
Capital gains
Interest income
Freelance income
and the tax liability exceeds ₹10,000, they must pay advance tax.
3. Senior Citizens with Business Income
Senior citizens without business income are exempt from advance tax.
However, if a senior citizen has business or professional income, advance tax provisions will apply.
4. Taxpayers under Presumptive Taxation (Section 44AD / 44ADA)
Taxpayers opting for presumptive taxation schemes must also pay advance tax.
However, instead of paying in four installments, they can pay 100% of advance tax in one installment on or before 15 March of the financial year.
Advance Tax Due Dates (FY 2025–26)
Advance tax must be paid in four installments:
| Due Date | Percentage of Tax Payable |
|---|---|
| 15 June | 15% |
| 15 September | 45% |
| 15 December | 75% |
| 15 March | 100% |
📌 Important:
The 4th installment must be paid on or before 15 March 2026 for FY 2025–26.
Interest for Non-Payment of Advance Tax
If advance tax is not paid or paid late, the taxpayer may have to pay interest under:
Section 234B
Interest is charged if advance tax paid is less than 90% of total tax liability.
Section 234C
Interest is charged for delay in payment of advance tax installments.
Benefits of Paying Advance Tax on Time
Paying advance tax on time provides several benefits:
✔ Avoid interest penalties
✔ Better financial planning
✔ No last-minute tax burden
✔ Smooth tax compliance
How to Pay Advance Tax
Advance tax can be paid online through the Income Tax e-filing portal:
Visit the Income Tax portal
Select e-Pay Tax
Choose Advance Tax (100)
Enter PAN and details
Make payment via net banking / UPI
Final Thoughts
Advance tax ensures taxpayers pay their taxes gradually during the financial year rather than facing a large tax liability later.
If your total tax liability exceeds ₹10,000, make sure to pay advance tax installments on time to avoid unnecessary interest and penalties.
📅 Remember:
The last installment of advance tax for FY 2025–26 is due on 15 March 2026.
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