Advance Tax: Paying as You Earn

Salaried employees usually pay income tax automatically through TDS, deducted by employers. But people with income from business, freelancing, rent, capital gains or interest may need to pay advance tax: tax paid in instalments during the year, rather than all at the end.

Who needs to pay

You must pay advance tax if your estimated tax liability for the year, after TDS, is 10,000 rupees or more.

Resident senior citizens aged 60 and above without business or professional income are exempt.

Due dates

For most taxpayers, advance tax is paid in four instalments:

• 15 June: at least 15 percent of the year’s tax.
• 15 September: at least 45 percent in total.
• 15 December: at least 75 percent in total.
• 15 March: 100 percent.

Taxpayers using presumptive taxation for small businesses and professionals can pay the entire amount by 15 March.

Interest for late or short payment

If you pay too little or too late, interest is charged, generally at 1 percent per month on the shortfall. This makes it expensive to delay.

Why the system exists

• It spreads government revenue across the year.
• It reduces the risk of large unpaid tax bills.
• It treats non-salaried taxpayers similarly to salaried people, whose tax is deducted monthly.

Estimating your tax

• Estimate income from all sources, including capital gains and interest.
• Subtract TDS already deducted.
• Pay the required share by each date, adjusting if income changes.

Unexpected income, such as a large capital gain, may need to be included in the next instalment.

The new law

The Income-tax Act, 2025, effective from April 2026, renumbered sections but kept the broad advance tax structure. Check current rules and dates each year.