Advance Tax Calculator

What Is Advance Tax and Who Must Pay It?

Advance tax is income tax paid in installments during the financial year itself, rather than as a lump sum at year-end. You pay tax as you earn, not after the year closes.

You must pay advance tax if your estimated tax liability after TDS credits is ₹10,000 or more in a financial year. This threshold applies to individuals, HUFs, partnership firms, and companies. Below ₹10,000, no advance tax is required — pay the balance when filing your ITR.

Senior citizens (age 60+) who do not have income from business or profession are fully exempt from advance tax. They can pay all tax at ITR filing time without any penalty. This is a specific exemption — it doesn't apply if you're 62 years old and running a consultancy.

Advance Tax Due Dates — The Four Installments

For non-corporate taxpayers (individuals, HUFs), advance tax is paid in four installments with specific cumulative percentages of total annual liability due by each date.

Interest Penalties — Section 234B and 234C

Section 234B and 234C impose interest for non-payment or short-payment of advance tax. These are not penalties in the punitive sense — they're interest charges at 1% per month (simple interest).

Section 234B applies when total advance tax paid is less than 90% of your final tax liability. Interest is charged at 1% per month from April 1 of the assessment year until the date of actual payment of tax. If your tax liability is ₹2 lakh and you paid only ₹1.5 lakh as advance tax (75%), Section 234B interest runs on ₹50,000 (the shortfall below 90%, which would be ₹1.8L).

Section 234C applies to shortfalls in each installment. If you haven't paid 15% of annual liability by June 15, interest runs at 1% per month for 3 months on the shortfall for that installment. Each installment shortfall is calculated independently.

In practice, these amounts are small relative to most tax liabilities. The real concern is the compounding awareness — large capital gains events (selling property, large equity positions) that happen late in the year can create surprise advance tax obligations.

Advance Tax on Capital Gains and Windfall Income

Capital gains create a particular challenge for advance tax because they're often unpredictable in timing and amount. You can't reliably estimate in June whether you'll sell shares in November.

SEBI provides relief here: for capital gains and other irregular income, you can pay the entire advance tax liability in the installment immediately following the income event. If you sell a large equity position in October generating ₹5 lakh in gains, you pay the entire advance tax on that gain in the December 15 installment. No Section 234C interest applies for the June and September shortfalls on this specific income, as long as December installment covers it fully.

For presumptive income under Section 44AD (small businesses up to ₹2 crore turnover) and Section 44ADA (professionals up to ₹75 lakh receipts), the entire advance tax can be paid in one installment by March 15. No partial installments required. This is a significant simplification for freelancers and small business owners.

How to Calculate and Pay Advance Tax

The calculation: estimate your total income for the year (salary, business/professional income, rental, interest, capital gains). Subtract deductions (80C, 80D, HRA, etc.). Apply the tax slab rates. Subtract TDS already or likely to be deducted. The net amount is your advance tax obligation. If it's above ₹10,000, pay it in installments by the due dates.

Payment is made online through the IT e-filing portal under 'e-Pay Tax'. Select Challan 280, assessment year (the year after the financial year — so for FY2025-26, select AY2026-27), and tax type 'Advance Tax'. Keep the payment receipt and BSR code — you'll need these when filing your ITR.

After paying, the advance tax shows up in your Form 26AS usually within 3–5 working days. Verify this before filing your ITR. If you pay advance tax that doesn't appear in 26AS, you'll face an automated demand notice — the solution is always to check payment details and raise a grievance to map the payment correctly.