How Advance Tax Is Calculated: Due Dates, Penalties & Calculation Formula

By Pradipta Ray · Published 3 October 2026

Under Indian tax law, taxpayers must pay income tax as they earn rather than in a lump sum at the end of the year. If your annual tax liability after TDS exceeds ₹10,000, advance tax rules apply to you.

The Income Tax Act mandates a 'pay-as-you-earn' scheme through Sections 208 to 219. While salaried employees have advance tax deducted automatically via monthly employer TDS, professionals, freelancers, and investors with dividend or capital gains must calculate and deposit quarterly instalments themselves.

Direct Answer: Advance tax is paid in four instalments: 15% by June 15, 45% by September 15, 75% by December 15, and 100% by March 15. Freelancers under Section 44ADA pay 100% in a single instalment by March 15.

Advance Tax Schedule & Installment Percentages

Statutory advance tax due dates and cumulative targets
Due Date	Cumulative Percentage Payable	Example: ₹1,00,000 Total Tax Liability
On or before June 15	15% of estimated tax	₹15,000
On or before September 15	45% of estimated tax (less paid)	₹30,000 (total ₹45,000)
On or before December 15	75% of estimated tax (less paid)	₹30,000 (total ₹75,000)
On or before March 15	100% of estimated tax (less paid)	₹25,000 (total ₹1,00,000)

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Understanding Section 234B and 234C Penalties

If you fail to pay quarterly instalments on time, Section 234C levies 1% simple interest per month on the shortfall for a 3-month period. If at the end of the financial year you have paid less than 90% of your total assessed tax, Section 234B levies an additional 1% per month on the unpaid balance starting from April 1 until the date of payment.

How to Pay Advance Tax Online

Log in to the e-filing portal (eportal.incometax.gov.in) and navigate to 'e-Pay Tax'.
Select Assessment Year (e.g., AY 2026-27 for FY 2025-26) and Type of Payment as 'Advance Tax (100)'.
Pay online via Net Banking, Debit Card, or UPI, and download the Challan (CRN) with BSR code for your tax filing records.

Frequently asked questions

Who is required to pay advance tax in India?

Any taxpayer (salaried, freelancer, business owner, or investor) whose estimated total tax liability for the financial year after deducting TDS exceeds ₹10,000 must pay advance tax.

Are senior citizens exempt from advance tax?

Yes. Resident senior citizens (aged 60 years or older) who do not have any business or professional income are completely exempt from paying advance tax.

What is the penalty for not paying advance tax?

Failure to pay advance tax on time attracts penal interest of 1% per month under Section 234C (for deferment of quarterly instalments) and Section 234B (for shortfall of more than 10% of total tax).

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