Advance Tax

Tax & Deductions

Advance tax is income tax paid in quarterly instalments during the financial year. Mandatory when annual tax liability exceeds Rs 10,000. Failure attracts 1% per month interest under Sections 234B and 234C.

In detail

Due dates: June 15 (15%), September 15 (45% cumulative), December 15 (75%), March 15 (100%). Senior citizens with no business income are exempt. For salaried employees, employer TDS usually covers liability. Becomes significant for capital gains, rental income, or freelance income.

Formula

Interest u/s 234C = 1% per month on shortfall in each instalment

Real-life example

🇮🇳 India example

Priya sells flat in October with Rs 20L LTCG. Tax due Rs 2.5L. She must pay Rs 1.875L by December 15 or face 1% monthly interest penalty.

Frequently asked questions

Do I pay advance tax on salary? ▼

Usually no -- employer TDS covers it. Pay advance tax only if total liability after TDS exceeds Rs 10,000 (from capital gains, rent, freelance, FD interest).