Advance Tax in India: Rules, Due Dates & Calculation for AY 2026-27

If you earn income that is not subject to TDS — such as freelance fees, rental income, capital gains, or interest from fixed deposits — you are likely required to pay advance tax in quarterly instalments throughout the financial year. Missing these deadlines triggers interest under Sections 234B and 234C, which can add up quickly.

This guide covers everything you need to know about advance tax for FY 2025-26 (AY 2026-27): who needs to pay, how to calculate it, the exact due dates, and how to avoid penalties.

What Is Advance Tax?

Advance tax is the income tax you pay in instalments during the financial year in which you earn the income, rather than as a lump sum when you file your return. Think of it as "pay-as-you-earn" — the government expects tax to flow in as income is generated, not months later.

For salaried employees, your employer deducts TDS from your salary each month, which effectively serves as your advance tax. But if you have significant income beyond salary — or if you are self-employed — you must handle advance tax yourself.

Who Must Pay Advance Tax?

You are required to pay advance tax if your total tax liability for the year (after TDS) is ₹10,000 or more.

This typically applies to:

• Freelancers and consultants earning professional income
• Business owners and self-employed professionals
• Salaried employees with substantial income from other sources (rent, capital gains, FD interest, freelance work on the side)
• Senior citizens (60+) who do not have business or professional income are exempt from advance tax — they can pay their entire liability at the time of filing

Quick Check: Do You Need to Pay?

Estimate your total income for the year, calculate tax on it under your chosen regime, and subtract TDS already deducted. If the remaining liability exceeds ₹10,000, you must pay advance tax.

Example: Rahul is a salaried software engineer earning ₹18,00,000 per year. His employer deducts TDS of ₹1,80,000. He also earns ₹4,50,000 from freelance consulting, on which clients deduct TDS of ₹45,000. His total tax liability works out to ₹2,70,000. After TDS of ₹2,25,000 (₹1,80,000 + ₹45,000), his remaining liability is ₹45,000 — well above ₹10,000. Rahul must pay advance tax on this balance.

Advance Tax Due Dates for FY 2025-26

Advance tax must be paid in four instalments during the financial year:

Important Notes on Due Dates

• If the due date falls on a Sunday or public holiday, you can pay on the next working day without penalty.
• You can pay more than the minimum percentage in any instalment — paying early does not attract any disadvantage.
• If you miss an earlier instalment, you can still pay the cumulative amount by the next due date to reduce interest liability.

Special Rule for Section 44AD/44ADA (Presumptive Taxation)

If you have opted for the presumptive taxation scheme under Section 44AD (business) or Section 44ADA (professionals), you can pay 100% of your advance tax in a single instalment by 15 March. You are not required to follow the quarterly schedule.

This is a significant simplification for small business owners and professionals with gross receipts up to ₹75 lakhs (44AD) or ₹75 lakhs (44ADA) under the enhanced limits for FY 2025-26.

How to Calculate Advance Tax

Follow these steps to compute your advance tax liability:

Step 1: Estimate Total Income

Add up all expected income for FY 2025-26:

• Salary (gross, before any deductions)
• Income from house property (rental income minus standard deduction and home loan interest)
• Capital gains (from stocks, mutual funds, property sales)
• Business or professional income
• Other sources (FD interest, dividends, etc.)

Step 2: Apply Deductions

Under the old regime, subtract deductions under Chapter VI-A (80C, 80D, etc.) and exemptions like HRA and LTA. Under the new regime, the standard deduction of ₹75,000 and employer NPS contributions under 80CCD(2) are the main deductions available. If you are unsure which regime suits you better, refer to our old vs new tax regime comparison.

Step 3: Calculate Tax

Apply the applicable slab rates to your net taxable income. Add surcharge (if income exceeds ₹50 lakhs) and 4% health and education cess.

Step 4: Subtract TDS and Tax Credits

Deduct TDS already deducted or expected to be deducted during the year. The balance is your advance tax liability.

Worked Example

Priya's situation for FY 2025-26:

• Salary income: ₹14,00,000
• Freelance income: ₹6,00,000
• FD interest: ₹1,20,000
• Total income: ₹21,20,000

Under the new tax regime:

• Standard deduction: ₹75,000
• Taxable income: ₹20,45,000

Tax calculation:

Add 4% cess: ₹2,11,250 + ₹8,450 = ₹2,19,700

Priya's employer deducts TDS of ₹1,20,000 on salary. Clients deduct TDS of ₹60,000 on freelance payments (10% under Section 194J). Bank deducts TDS of ₹12,000 on FD interest.

Total TDS: ₹1,92,000 Advance tax payable: ₹2,19,700 − ₹1,92,000 = ₹27,700

Her instalment schedule:

How to Pay Advance Tax Online

1. Visit the e-filing portal at incometax.gov.in
2. Navigate to e-Pay Tax under the Quick Links section
3. Select Challan No. / ITNS 280
4. Choose Tax Applicable: Income Tax (other than companies)
5. Select Type of Payment: Advance Tax (100)
6. Enter your PAN, assessment year (2026-27), and the amount
7. Choose your payment method (net banking, debit card, UPI, or NEFT/RTGS)
8. Complete the payment and save the challan receipt

Keep your challan receipts — you will need the BSR code, challan serial number, and date of payment when filing your ITR. 49Tax automatically matches your advance tax payments from Form 26AS, so these get pre-filled when you file.

Penalties for Not Paying Advance Tax

Two interest provisions apply when you miss advance tax obligations:

Section 234B: Interest for Default in Payment

If you pay less than 90% of your total tax liability as advance tax during the year, interest under Section 234B applies at 1% per month (simple interest) on the shortfall amount. This interest runs from 1 April of the assessment year until the date you actually pay the tax.

Example: If your total liability is ₹1,00,000 and you paid only ₹80,000 as advance tax (less than 90%), interest applies on ₹20,000 at 1% per month from April 2026 until you pay the balance.

Section 234C: Interest for Deferment of Instalments

If you miss or underpay any quarterly instalment, interest under Section 234C applies at 1% per month on the shortfall for 3 months (the period until the next instalment).

Key point: Interest under both sections is calculated on simple interest basis, and part of a month is treated as a full month.

Can You Avoid 234C Interest on Capital Gains?

Yes, partially. Since capital gains are difficult to predict, the law provides relief: if you earn capital gains or unexpected income after a particular due date, you are only required to include that income in subsequent instalments. You will not be charged 234C interest for failing to account for income you had not yet earned.

For salaried individuals with side income from freelancing, it is worth estimating your total freelance earnings early in the year to avoid surprises.

Advance Tax vs Self-Assessment Tax: What Is the Difference?

If you missed advance tax deadlines, you can still pay self-assessment tax before filing your return. You will owe interest under 234B and 234C, but filing your return on time avoids the additional interest under Section 234A.

Practical Tips to Stay on Top of Advance Tax

1. Set calendar reminders two weeks before each due date (1 June, 1 September, 1 December, 1 March) to give yourself time to calculate and pay.

2. Overestimate slightly — paying a little extra in advance tax is better than underpaying. Any excess gets refunded when you file your ITR.

3. Track TDS through the year — check your Form 26AS and AIS periodically to see how much TDS has been credited. This helps you adjust advance tax instalments.

4. Revise estimates each quarter — if your income changes significantly (say you sell shares at a profit in Q3), recalculate and adjust your remaining instalments upward.

5. Use 49Tax's tax estimator to project your liability based on your Form 16 and other income documents, making instalment calculation straightforward.

Key Takeaway

If your tax liability after TDS exceeds ₹10,000, paying advance tax in quarterly instalments is not optional — it is a legal requirement. The good news is that the calculation is straightforward once you have a reasonable estimate of your annual income. Mark the four due dates (15 June, 15 September, 15 December, 15 March), estimate conservatively, and pay on time. The few minutes it takes each quarter will save you from unexpected interest charges of 1% per month that silently accumulate until you file your return.