What is advance tax and when does it apply?
Advance tax is income tax paid in installments during the financial year itself, rather than as a lump sum at the time of filing your ITR. The rationale: the government wants tax revenue as income is earned, not a year later.
Advance tax applies when your estimated tax liability (after TDS) exceeds ₹10,000 for the year.
For most business owners and freelancers whose clients don't deduct TDS — or don't deduct enough — advance tax is a routine quarterly obligation.
FY 2025-26 advance tax schedule
| Due date | Cumulative payment required |
|---|---|
| 15 June 2025 | At least 15% of estimated annual tax |
| 15 September 2025 | At least 45% of estimated annual tax |
| 15 December 2025 | At least 75% of estimated annual tax |
| 15 March 2026 | 100% of estimated annual tax |
You don't have to be precise — estimates are fine. The income tax department expects adjustments as the year progresses.
Section 44AD: single-installment advance tax
If you file under Section 44AD (presumptive taxation for businesses with turnover ≤ ₹3 crore), you're eligible for a simplified schedule: pay 100% of advance tax in a single installment by 15 March 2026.
No quarterly pressure. But the full year's tax must be paid by 15 March — delay beyond that attracts interest u/s 234B.
Consequences of non-payment
| Section | When interest applies | Rate |
|---|---|---|
| 234B | If advance tax paid < 90% of assessed tax | 1% per month from April 1 to date of assessment |
| 234C | Shortfall in quarterly installments | 1% per month for 3 months on each installment shortfall |
Practical impact: If you forget the September installment (45%), you'll pay 1% × 3 months = 3% on the shortfall for that quarter. It adds up — better to pay on time.
How to pay advance tax
- Log into
incometax.gov.in→ e-Pay Tax → Pay via Challan ITNS 280 - Select: (0021) Income Tax (Other than Companies) or (0020) for companies
- Select: (300) Self Assessment Tax for full payment, or (100) Advance Tax for installments
- Enter your PAN, assessment year, and amount
Keep the challan receipt — you'll enter the BSR code and challan number in your ITR.