What is Advance Tax?
Last updated: 27 June 2026
Advance Tax is the requirement under the Income Tax Act to pay income tax in instalments during the financial year itself — rather than as a lump sum at filing time — whenever a taxpayer's estimated tax liability (after TDS credit) is ₹10,000 or more for the year.
"Pay as you earn" is the philosophy. It applies to all taxpayers — individuals, proprietors, partnership firms, companies, LLPs — with income from business, capital gains, interest, rent, or any other source where TDS has not already been fully deducted.
Advance Tax instalment schedule (FY 2025-26)
| Instalment | Due date | Cumulative % of total tax |
|---|---|---|
| 1st | 15 June 2025 | 15% |
| 2nd | 15 September 2025 | 45% |
| 3rd | 15 December 2025 | 75% |
| 4th | 15 March 2026 | 100% |
For FY 2026-27, the same dates apply with a year shift (15 Jun 2026, 15 Sep 2026, 15 Dec 2026, 15 Mar 2027).
Fact box. Taxpayers under the presumptive taxation scheme (Section 44AD for business or 44ADA for professionals) pay advance tax in a single instalment of 100% by 15 March — they are not required to pay in June, September, or December instalments.
Who is exempt?
- Resident senior citizens (age 60+) with no income from business or profession are fully exempt from advance tax.
- All others — including working professionals with significant non-salary income, traders, manufacturers, companies — must comply if estimated tax liability (net of TDS) is ₹10,000 or more.
Interest for non-payment or shortfall
| Section | Trigger | Interest |
|---|---|---|
| 234B | Less than 90% of total tax paid by 31 March | 1% per month on shortfall |
| 234C | Each instalment below the required cumulative % | 1% per month on the instalment shortfall |
Interest runs from the instalment due date and is computed at 1% per month (simple interest). Even a single day's shortfall triggers a full month's interest.
How to pay advance tax
Advance tax is paid online through the Income Tax Department's e-filing portal (incometax.gov.in) under Challan No. 280. Choose Assessment Year, type of payment as "Advance Tax (100)," and make the payment via net banking or debit card.
Frequently asked questions
If I receive an unexpected capital gain mid-year, do I owe advance tax on it? Yes. Capital gains (short-term or long-term) are included in the advance-tax computation. For gains arising after 15 December, the entire tax on such gains must be paid by 15 March without any shortfall interest for the earlier instalments.
Does advance tax paid appear in Form 26AS? Yes. Self-assessed advance tax payments reflect in Form 26AS (Annual Information Statement) and can be cross-verified when filing ITR.
Sources: Income Tax Act, Sections 207–219, 234B, 234C; Income Tax Department — incometax.gov.in
General information, not professional advice. Verify on the official portal for your case. Reviewed by a Chartered Accountant; last updated 27 June 2026.
Related: TDS (Tax Deducted at Source) · TCS · Balance Sheet