Advance Tax Payment 2026: When to Pay, How to Calculate, Complete Guide

The ₹10,000 Threshold That Costs You Monthly

Every quarter, millions of Indians face a deceptively simple question: “Do I owe advance tax?”

The answer hinges on a number most people never think about—₹10,000. If your total tax liability (after accounting for TDS already deducted) exceeds ₹10,000 in any financial year, the government expects you to pay tax in four quarterly installments, not all at once in April after the year ends.​

Miss even one deadline, and Section 234C kicks in: 1% interest per month on your shortfall. It compounds silently. For someone who owes ₹1,00,000 in advance tax and pays late, interest alone could cost ₹5,000 to ₹20,000 depending on how long they procrastinate.​

With inflation at just 0.71% year-on-year in November 2025—the lowest in years—and the RBI projecting benign inflation of just 2% for FY26, managing cash flow should actually be easier. Yet tens of thousands of taxpayers still overpay or underpay because they don’t understand the mechanics.​

This guide cuts through the jargon. You’ll learn the exact dates you need to mark on your calendar, how to calculate what you actually owe, and the loopholes that let you avoid penalties even if you’re slightly behind.

Key Takeaways (TL;DR)

• ₹10,000 threshold: Your tax liability after TDS deduction must exceed this to trigger advance tax​
• Four quarterly due dates for regular taxpayers: June 15 (15%), September 15 (45%), December 15 (75%), March 15 (100%)​
• Presumptive taxation exception: Self-employed/business owners under Section 44AD only pay once: March 15, 100%​
• Section 234C penalty: 1% per month on shortfall if you don’t hit minimum percentages per quarter​
• Safe harbor rule: If you pay 12% by June 15 AND 36% by September 15, you avoid all Section 234C interest​
• New regime tax changes: Relaxed slabs (up to ₹4L tax-free, ₹60,000 rebate) mean lower advance tax for many​

Understanding the ₹10,000 Threshold—Who Must Pay

The advance tax requirement isn’t universal. It applies specifically to those whose estimated tax liability exceeds ₹10,000 after accounting for Tax Deducted at Source (TDS).​

Consider this scenario:

Ravi earns ₹50 lakh salary where his employer deducts ₹9 lakh TDS. That looks covered. But Ravi also earns ₹50,000 in bank interest (minimal TDS) and receives ₹3 lakh in stock dividends (20% TDS = ₹60,000 deducted). His total tax liability for the year: ₹12,50,000. His total TDS/TCS credited: ₹9,60,000. Net liability: ₹2,90,000. Ravi must pay advance tax.​

Without understanding this, Ravi might assume his salary TDS covers everything and miss all four advance tax deadlines—costing him 1% monthly interest on shortfalls.​

Who typically falls into advance tax:​

• Freelancers/consultants with irregular TDS deductions
• Business owners with estimated profit
• Real estate investors with rental income (TDS rarely applies to rentals)
• Investors in stocks/mutual funds where dividends have minimal TDS
• People with side income (YouTube monetization, consulting, etc.)
• Those with bank interest exceeding ₹40,000 in a year (no TDS below that threshold)

Who does NOT typically pay advance tax:

• Salaried employees whose employer TDS fully covers their liability
• People with only salary income and no supplementary income
• Those whose total tax liability never exceeds ₹10,000 after TDS

The Four Due Dates—Quarterly Payments Explained

The Income Tax Department divides the financial year into four quarters, each with a cumulative payment target:​

Regular Taxpayers (All assessees except those on presumptive scheme)

Due Date	Minimum Advance Tax	Installment Amount (assuming ₹1,00,000 total liability)	Cumulative Target
June 15, 2025	15%	₹15,000	15%
September 15, 2025	45%	₹30,000 (45% – 15% already paid)	45%
December 15, 2025	75%	₹30,000 (75% – 45% already paid)	75%
March 15, 2026	100%	₹25,000 (100% – 75% already paid)	100%

Critical note: These are cumulative targets, not individual quarterly targets. You must ensure that by December 15, you’ve paid at least 75% total (not 75% in that quarter alone).​

For Presumptive Taxation Scheme (Section 44AD/44ADA)

Self-employed professionals and business owners under the presumptive income scheme have a single deadline:​

• March 15, 2026: 100% of advance tax in one payment

This exception exists because presumptive taxation involves estimating income upfront, not tracking actual earnings quarterly.​

How to Calculate Your Advance Tax—Five-Step Process

Calculating advance tax isn’t mysterious. It’s simple arithmetic. Here’s the step-by-step process:​

Step 1: Estimate Total Income from All Sources

List every income source for April 1 – March 31 of the financial year:

• Salary
• Business/professional income
• Rental income (property)
• Interest (bank, bonds)
• Stock dividends
• Capital gains
• Any other source​

Example: Salary ₹50 lakh + Bank interest ₹50,000 + Dividend ₹1 lakh = ₹51.5 lakh total estimated income

Step 2: Apply Applicable Tax Slabs and Compute Tax

As of FY 2025-26, taxpayers can choose either the Old Tax Regime or the New Tax Regime. The new regime offers significantly better rates:​

New Tax Regime (FY 2025-26):​

• Up to ₹4 lakh: 0% (was ₹3 lakh previously)
• ₹4-8 lakh: 5%
• ₹8-12 lakh: 10%
• ₹12-16 lakh: 15%
• ₹16-20 lakh: 20%
• ₹20-24 lakh: 25% (NEW slab)
• Above ₹24 lakh: 30%

Plus, a rebate up to ₹60,000 is available for individuals with net taxable income up to ₹12 lakh.​

Old Tax Regime (unchanged):

• Up to ₹2.5 lakh: 0%
• ₹2.5-5 lakh: 5%
• ₹5-10 lakh: 20%
• Above ₹10 lakh: 30%

Example (using new regime): ₹51.5 lakh income → Tax = ₹60,000 (up to 4L) + 20,000 (4-8L at 5%) + 40,000 (8-12L at 10%) + 60,000 (12-16L at 15%) + 80,000 (16-20L at 20%) + 100,000 (20-24L at 25%) + 84,500 (excess above 24L at 30%) = ₹12,04,500 total tax​

Step 3: Deduct TDS/TCS Already Credited

Subtract any Tax Deducted at Source or Tax Collected at Source your employers or service providers have already paid:

• Employer TDS on salary
• TCS on e-commerce payments
• TDS on rental income (if applicable)
• TDS on freelance income​

Example: Already TDS credited = ₹8 lakh (from salary) + ₹0 (from interest/dividends)

Step 4: Calculate Net Tax Liability

Computed tax – TDS credited = Net tax you owe​

Example: ₹12,04,500 (computed tax) – ₹8,00,000 (TDS) = ₹4,04,500 net liability

Step 5: Check Against ₹10,000 Threshold

If net liability > ₹10,000 → You must pay advance tax​
If net liability ≤ ₹10,000 → You don’t need to pay advance tax

Example: ₹4,04,500 > ₹10,000 → Yes, advance tax required = ₹4,04,500​

Real Scenarios—Who Pays and How Much

Understanding the framework abstractly is one thing. Seeing it applied to real situations is where clarity emerges.

Scenario 1: Salaried Employee with Side Income

Priya earns ₹45 lakh salary (employer TDS: ₹8 lakh). She also freelances and earns ₹10 lakh (TDS: ₹50,000). Bank interest: ₹40,000 (no TDS).

• Total income: ₹55,40,000
• Computed tax (new regime): ~₹10,00,000
• Total TDS: ₹8,50,000
• Net liability: ₹1,50,000 (exceeds ₹10,000 threshold)
• Advance tax required: ₹1,50,000

Payment schedule (cumulative):

• June 15: ₹22,500 (15%)
• Sept 15: ₹67,500 (45%)
• Dec 15: ₹112,500 (75%)
• March 15: ₹37,500 (final)

---

Scenario 2: Business Owner (Presumptive Scheme)

Arjun runs a small IT services business under Section 44ADA (presumptive taxation). Estimated annual income: ₹30 lakh. No TDS deducted (payments directly received).

• Presumed income (8% of receipts): ₹24 lakh
• Computed tax: ₹5,00,000
• TDS: ₹0
• Net liability: ₹5,00,000 (exceeds ₹10,000)
• Advance tax: ₹5,00,000

Payment schedule: Because Arjun is under presumptive scheme:

• Single payment: March 15, 2026: ₹5,00,000 (100%)​

---

Scenario 3: Investor with Capital Gains

Meera invested in mutual funds. She earned ₹5 lakh annual salary (employer TDS: ₹80,000). She also realized ₹20 lakh in long-term capital gains (20% TCS = ₹4 lakh) and ₹10 lakh in short-term capital gains (30% TCS = ₹3 lakh).

• Total income: ₹35 lakh
• Computed tax: ₹8,50,000
• Total TCS: ₹7,80,000
• Net liability: ₹70,000 (exceeds ₹10,000)
• Advance tax: ₹70,000

Payment schedule (quarterly):

• June 15: ₹10,500
• Sept 15: ₹31,500
• Dec 15: ₹52,500
• March 15: ₹17,500

The Penalty Trap—Section 234C Interest Explained

Here’s where procrastination has a direct cost. If you don’t meet the quarterly targets, the income tax department imposes interest under Section 234C at 1% per month on the shortfall.​

How Section 234C Works:​

For every missed or short payment, interest is calculated as:

• Rate: 1% per month (or part of a month)
• Amount: Calculated on the shortfall only, not the full liability
• Duration: From due date until actual payment​

Example 1: Miss June 15 Deadline

Total advance tax: ₹1,00,000
You must pay by June 15: ₹15,000 (15%)
You actually paid: ₹5,000 (5%)
Shortfall: ₹10,000
Interest: 1% × 3 months × ₹10,000 = ₹300​

Example 2: Late Payment on Multiple Deadlines

Deadline	Required (%)	Required Amt	Actually Paid	Shortfall	Months	Interest
June 15	15%	₹15,000	₹5,000	₹10,000	3	₹300
Sept 15	45%	₹45,000	₹20,000	₹25,000	3	₹750
Dec 15	75%	₹75,000	₹50,000	₹25,000	3	₹750
March 15	100%	₹1,00,000	₹100,000	₹0	–	₹0
				Total Interest Due		₹1,800

Over ₹1,800 in penalties just for procrastinating on quarterly payments.​

The Safe Harbor Exception:​

Here’s a critical loophole: If you pay at least 12% by June 15 AND at least 36% by September 15 (cumulative), the income tax department charges zero interest under Section 234C, even if you’re late on December 15 and March 15.​

Why this matters: You don’t have to be perfect on every date. As long as you hit these two milestones (12% and 36%), you avoid penalties for the rest of the year.​

New Tax Regime Changes—Why Advance Tax Might Be Lower in 2026

Budget 2025 brought significant relief to taxpayers, particularly those on the new tax regime. Understanding these changes directly impacts how much advance tax you’ll owe.​

What Changed (New Regime Only):​

1. Basic exemption raised: ₹3 lakh → ₹4 lakh (₹1 lakh relief for everyone)
2. New 25% slab created: Income from ₹20-24 lakh now taxed at 25% (previously all income above ₹15 lakh was 30%)
3. Rebate increased to ₹60,000: Anyone on the new regime with net taxable income up to ₹12 lakh pays zero tax​

Impact Example:​

An individual earning ₹12 lakh (new regime):

• Before Budget 2025: Tax = ₹1,27,500
• After Budget 2025 (with new rebate): Tax = ₹0 (rebate of ₹60,000 wipes out tax completely)
• Advance tax savings: ₹1,27,500 → ₹0​

For someone earning ₹20 lakh:

• Before: Tax = ₹2,87,500
• After: Tax = ₹1,60,000 (new 25% slab for ₹20-24L range)
• Advance tax savings: ₹1,27,500​

Old regime remains unchanged, but the new regime is now so favorable that most taxpayers benefit more from switching.​

The Contrarian Take—Why Smart Taxpayers Pay More Than Required

Most taxpayers calculate the minimum advance tax they legally owe and pay exactly that. But tax advisors often recommend paying slightly more than the mandatory quarterly amounts.

Why? Behavioral economics and cash flow management.

When inflation was running at 4-5% (pre-2024), the cost of holding cash was high—better to avoid overpaying advance tax and invest the difference. But with inflation now at just 0.71% and the RBI projecting only 2% for FY26, the opportunity cost of holding extra cash is minimal.​

Simultaneously, advance tax late payments trigger Section 234C interest at 12% annually (1% monthly). That return beats most fixed deposits (which are offering 6-7% currently for 1-year tenors).​

Data insight: FY 2024-25 saw advance tax collections jump 14% YoY, driven by AI-based surveillance by the Income Tax Department. Non-compliance detection has improved dramatically.​

The smart move: Pay slightly more in earlier quarters (June, September) to stay above the safe harbor thresholds (12%, 36%) and avoid any interest risk. With benign inflation, the money isn’t earning much elsewhere anyway.

Common Mistakes and How to Avoid Them

Mistake 1: Underestimating Side Income

Many people earn supplementary income (freelance, rental, dividends) and forget to include it in advance tax calculations.

Fix: List EVERY income source. If unsure whether it’s taxable, include it conservatively. Better to overpay than underpay.​

---

Mistake 2: Not Accounting for TDS in Calculations

Some forget that TDS already deducted by employers or platforms reduces your advance tax liability.

Fix: Calculate net liability = Computed tax – TDS credited. Only this net amount (if > ₹10,000) requires advance tax.​

---

Mistake 3: Treating Installments as Equal

Advance tax installments are NOT equal. They follow cumulative percentages: 15%, 45%, 75%, 100%. Paying ₹25,000 each quarter when your total is ₹1,00,000 means you’ll be short by September 15.​

Fix: Use the cumulative percentage approach. June: 15% of total. September: 45% minus what you’ve already paid. December: 75% minus prior payments.​

---

Mistake 4: Confusing Old and New Regime Slab Rates

The old regime hasn’t changed, but the new regime rates are now more favorable. Calculating advance tax under the wrong regime leads to over/underpayment.​

Fix: Determine which regime you’ll file under for the year, then use those slab rates for advance tax.​

---

Mistake 5: Missing Payment Deadlines Entirely

Some people pay nothing until March 15 (the final deadline). Even though you technically have until March to pay 100%, missing June, September, and December deadlines triggers Section 234C interest on shortfalls.​

Fix: Mark all four dates on your calendar. Set reminders 10 days before each deadline. The interest cost (₹500-₹5,000+) is not worth the late fees.

How to Make Advance Tax Payments—Methods and Portals

Once you’ve calculated your advance tax liability, the actual payment is straightforward:​

Online (Recommended):

1. Visit https://www.incometax.gov.in (official Income Tax portal)
2. Click “e-Pay” or “Make a Payment”
3. Select “Advance Tax” as payment type
4. Enter PAN, payment amount, and advance tax due date
5. Choose payment method: Net banking, debit card, credit card, NEFT​

Offline (Less Common):

• Visit your bank and provide a challan (form) for advance tax payment
• Banks provide pre-printed challans at branches
• Payment is credited to your PAN within 2-3 working days​

SMS/IVRS: Not available for advance tax; must use online portal or bank​

Actionable Conclusion—Three Next Steps

Within the Next Week:

1. Calculate your estimated income for FY 2025-26: List all sources (salary, freelance, rental, investment income). Be generous in your estimate; you can adjust later.​
2. Compute total tax using new regime slabs: Given the relaxed rates and ₹60,000 rebate, the new regime likely benefits you. Plug your estimated income into a tax calculator (ClearTax, TaxFilings) to get your computed tax.​
3. Subtract TDS already credited: Review your salary slip and investment statements. Note down total TDS expected for the year.​

By June 10, 2025:

4. Pay the first advance tax installment: Based on your calculation, pay 15% of your net tax liability before June 15, 2025.​

Ongoing (Every Quarter):

5. Revisit and update your estimate: As the year progresses, refine your income estimate. If income is higher than expected, increase advance tax. If lower, you can adjust.

Financial Disclaimer

This article provides general educational information about advance tax payment requirements under the Income Tax Act, 1961. It is not financial or legal advice.

Regulatory context: Advance tax is mandated under Section 208-210 of the Income Tax Act for taxpayers whose estimated tax liability exceeds ₹10,000 in a financial year. Non-compliance triggers interest penalties under Section 234C (1% monthly on shortfall) and potential late-filing penalties under Section 234B (1% monthly if advance tax is less than 90% of assessed liability for the year).

Tax slab rates mentioned: Based on Union Budget 2025 effective April 1, 2025, for FY 2025-26. Rates are subject to change in future budgets. Consult current official sources (incometax.gov.in) for the latest rates.

For personalized advice: Consult a Chartered Accountant (CA) registered with the Institute of Chartered Accountants of India (ICAI) or a qualified tax professional who understands your specific financial situation.

Source Links

1. Trading Economics. (2025). India Inflation Rate—CPI & WPI Trends. https://tradingeconomics.com/india/inflation-cpi
2. IndiaFilings. (2025). Advance Tax Payment: Due Dates & Procedure. https://www.indiafilings.com/learn/advance-tax-payment/
3. Tax2Win. (2025). Section 234C—Interest on Default in Payment of Advance Tax. https://tax2win.in/guide/section-234c
4. IndusInd Bank. (2025). First Advance Tax Payment Due on 15th June. https://www.indusind.bank.in/iblogs/trends/first-advance-tax-payment/
5. WiseBooks. (2025). Why Advance Tax is Important in 2025-26. https://wisebooks.in/blog/advance-tax-rules-for-fy-202526
6. Quickolearn. (2024). Section 234C: Interest for Delay in Advance Tax Payment. https://learn.quicko.com/penalty-for-deferment-of-advance-tax-section-234c
7. ClearTax. (2025). Advance Tax Payment Guide: Due Dates, Calculation, and Exemptions. https://cleartax.in/s/advance-tax
8. Tax2Win. (2025). What is Advance Tax and How to Calculate It. https://tax2win.in/guide/advance-tax
9. India Tribune. (2025). India’s GDP and Inflation Projections for FY26. https://www.indiatribune.com/public/indias-gdp-projected-to-grow-74-pc-in-fy26
10. ClearTax. (2025). Income Tax Slabs for FY 2025-26 (AY 2026-27). https://cleartax.in/s/income-tax-slabs
11. Bajaj Finserv. (2025). Income Tax Slabs and Rates for FY 2025-26. https://www.bajajfinserv.in/investments/income-tax-slabs
12. Hindu Business Line. (2025). FY25 Advance Tax Collections Rise 14% YoY. https://www.thehindubusinessline.com/economy/fy25-advance-tax-mop-up-rises-14-led-by-personal-it-segment/
13. ClearTax. (2025). Income Tax Changes from April 2025. https://cleartax.in/s/income-tax-changes-from-april-2025
14. Open Money. (2025). Advance Tax Calculator: A Complete Guide for Indian Taxpayers. https://open.money/blog/advance-tax-calculator/