Advance tax is the tax paid in installments instead of a lump sum at the end of the financial year. It is also known as ‘pay-as-you-earn’ tax. This system ensures a steady inflow of revenue for the government and reduces last-minute tax burdens for taxpayers. Advance Tax Payment can be done on the Income Tax Website. Here are details about Advance Tax Payment including step by step process to e-Pay Tax on the Incom Tax Website.
What is Advance Tax?
Advance tax refers to the income tax paid beforehand rather than as a single payment at the end of the financial year. It is the tax you incur while you generate income. These payments must be made in installments according to the due dates set by the income tax department.
Who Should Pay Advance Tax?
Employees, self-employed individuals, and companies – If your total tax obligation is ₹10,000 or higher in a financial year, you must make advance tax payments. The advance tax is applicable to every taxpayer, including salaried workers, freelancers, and companies.
Elderly individuals – Those who are 60 years or older and do not operate a business are not required to pay advance tax. Thus, only elderly individuals (aged 60 or older) with business earnings are required to pay advance tax.
Presumptive income for businesses – Taxpayers who choose the presumptive taxation scheme outlined in section 44AD must pay their entire advance tax in a single installment by 15th March. They additionally have the choice to settle all their tax obligations by March 31st.
Presumptive income for professionals—Independent professionals like doctors, lawyers, architects, etc., qualify for the presumptive scheme under section 44ADA. They must settle their entire advance tax obligation in a single payment by 15th March. They may also settle the total sum by 31st March.
Advance Tax is to be paid on a regular salary, including earnings from rent, capital gains, lottery earnings, fixed deposits, and more.
Download Income Tax Calculator FY 2025-26 (AY 2026-27)
Advance Tax Due Dates For FY 2024-25
| Due Date | Advance Tax Payment Percentage |
|---|---|
| On or before 15th June | 15% of advance tax |
| On or before 15th September | 45% of advance tax (-) advance tax already paid |
| On or before 15th December | 75% of advance tax (-) advance tax already paid |
| On or before 15th March | 100% of advance tax (-) advance tax already paid |
How to Calculate Advance Tax?
- Estimate Total Income: Sum up all income sources – salary, business, capital gains, rent, or interest.
- Deduct Allowable Expenses: Reduce applicable deductions like 80C, 80D, HRA, home loan interest, etc.
- Compute Tax Liability: Apply the prevailing income tax slab rates.
- Subtract TDS Deducted: Reduce the tax already deducted at the source.
- Determine Advance Tax Amount: If the balance tax liability exceeds Rs. 10,000, divide it per the due dates mentioned above.
How to Pay Advance Tax on Income Tax Website?
1. Visit the e-filing portal of the Income Tax Department of India.
2. On the left side of the home page, you’ll find a ‘Quick Links’ section; select the ‘e-Pay Tax’ option. You can additionally look for ‘e-Pay Tax’ in the search field
3. On this page, input your PAN and input it again to verify. Next, input your mobile number and press ‘Continue’
4. Please input the 6-digit OTP that was sent to your mobile number and press ‘Continue’
5. Select the box with label as ‘Income Tax’ and click on ‘Proceed’
6. Select the ‘Assessment Year’ as 2025-26 and ‘Type of Payment’ as ‘Advance Tax (100)’ and click on ‘Continue’.
7. Enter all the tax details.
8. Select the payment method and the bank and press ‘Continue’.
9. Review the challan information and select ‘Pay Now’. You can also ‘Edit’ this information if necessary.
10. Once the payment is completed, you will receive a confirmation on the following screen. The BSR code and challan serial number can be found on the right side of the challan. Keep a copy of this tax receipt for future use. You must input the BSR code and challan number in your tax return.
Penalties for Non-Payment or Late Payment
Interest Under Sections 234B & 234C
- Section 234B: If at least 90% of the total tax liability is not paid by March 31, interest at 1% per month is charged.
- Section 234C: If advance tax installments are not paid on time, a penalty of 1% per month is imposed on the unpaid amount.
Benefits of Paying Advance Tax
- Avoids last-minute tax burden: Spreads tax payments across the year.
- Reduces interest penalties: Timely payment saves money on penalties.
- Smooth cash flow for businesses: Helps manage finances better.
- Prevents legal issues: Keeps taxpayers compliant with tax laws.
Frequently Asked Questions (FAQs)
1. What happens if I miss an installment?
If you miss an installment, interest penalties under Sections 234B and 234C apply.
2. Can I get a refund if I overpay?
Yes, any excess tax paid will be refunded by the Income Tax Department after assessment.
3. Can I pay advance tax in one go?
Yes, you can pay the entire advance tax in one installment instead of multiple payments.
4. Is advance tax applicable to NRIs?
Yes, NRIs with taxable income exceeding Rs. 10,000 in India need to pay advance tax.
5. What if my income changes after making an advance tax payment?
You can adjust future installments accordingly, but any shortfall might attract interest.
6. Do I need to pay advance tax if my employer deducts TDS?
If TDS covers your tax liability, no advance tax is needed. But if you have additional income, advance tax is applicable.
7. Can I pay advance tax offline?
Yes, you can visit designated bank branches and pay via Challan 280.
8. What is the penalty for failing to pay advance tax?
Interest under Sections 234B and 234C applies, increasing your tax burden.
9. Can a salaried person pay advance tax?
Yes, if they have additional income sources like rent, dividends, or capital gains.
10. Is advance tax applicable to small businesses?
Yes, if the tax liability exceeds Rs. 10,000. However, businesses under the presumptive taxation scheme pay in a single installment by March 15.
By understanding advance tax and making timely payments, you can avoid penalties and manage your tax burden efficiently!
