Key takeaways
- Advance tax is payable when your estimated tax for the year, after TDS, is ₹10,000 or more.
- Instalments are due by 15 June (15%), 15 September (45%), 15 December (75%) and 15 March (100%), cumulatively.
- Businesses and professionals under presumptive taxation can pay the whole amount by 15 March.
- Short payment or late payment attracts interest, so estimate carefully and revise each quarter.
Advance tax means paying your income tax during the year, as you earn, instead of in one lump sum after the year ends. It is often called "pay as you earn". Business owners who miss it end up paying interest on top of their tax. This guide explains advance tax for businesses and how to get it right.
Who must pay advance tax?
Anyone whose estimated tax for the year, after reducing TDS and TCS, is ₹10,000 or more must pay advance tax. This includes companies, LLPs, firms, proprietors and professionals. A resident senior citizen with no business or professional income is exempt.
Instalment due dates
| Due date | Cumulative amount to pay by this date |
|---|---|
| 15 June | At least 15% of the year's advance tax |
| 15 September | At least 45% |
| 15 December | At least 75% |
| 15 March | 100% |
Presumptive taxpayers: businesses and professionals declaring income under the presumptive scheme can pay the whole advance tax in one instalment, on or before 15 March. Read our guide to presumptive taxation.
How to calculate advance tax
- Estimate your income for the full year from all sources: business profit, salary, rent, interest and capital gains.
- Subtract eligible deductions available under the tax regime you will use.
- Calculate tax at the applicable rates, plus surcharge and cess.
- Subtract TDS and TCS already deducted or expected for the year.
- Pay the instalment due by the next date, based on the cumulative percentage.
Example: A company expects tax of ₹4,00,000 for the year, and TDS of ₹40,000 on its receipts. Advance tax payable is ₹3,60,000. By 15 June it should have paid ₹54,000 (15%), by 15 September ₹1,62,000 (45%), by 15 December ₹2,70,000 (75%), and by 15 March the full ₹3,60,000.
Review the estimate every quarter. If profit rises, pay more in the next instalment; if it falls, you can pay less.
Interest for short or late payment
- Deferment of instalments: if you pay less than the required percentage by an instalment date, interest of 1% per month applies on the shortfall for the period of delay.
- Shortfall for the year: if total advance tax paid is less than 90% of the tax assessed, interest of 1% per month applies on the shortfall from 1 April after the year until payment.
These interest rules continue under the Income-tax Act, 2025, which applies from 1 April 2026, under new section numbers.
Common mistakes
- Forgetting capital gains or one-off income received during the year
- Not updating the estimate after a strong quarter
- Counting TDS that has not actually been deducted or reported
- Paying with the wrong assessment or tax year, or wrong payment type, on the challan
- Waiting until March, then paying interest on missed earlier instalments
How to pay
Pay online on the income tax e-filing portal using e-Pay Tax, choosing advance tax as the type of payment. Keep the challan details; they go into your return.
All instalment dates are in our compliance calendar. Our advance tax and tax planning team estimates your liability each quarter, so you pay the right amount at the right time.
This article explains the general position as on the date shown. Tax rates, deductions and interest rules can change with each Budget; confirm the current position for your situation.
Frequently asked questions
Do salaried people pay advance tax?
Usually their employer deducts TDS, which covers most of the tax. If they have other income such as business income, rent or capital gains, they may still need to pay advance tax on it.
Who is exempt from advance tax?
A resident senior citizen who has no income from business or profession does not need to pay advance tax.
How do I pay advance tax?
Online through the income tax e-filing portal, using the e-Pay Tax facility, selecting advance tax as the payment type.
What if I pay more than needed?
The extra amount is adjusted against your final tax when you file your return, and any excess is refunded with interest where applicable.