Who has to pay advance tax
Advance tax means paying income tax during the year rather than all at once when you file. You must pay it if your total tax for the year, after subtracting TDS and TCS, is ₹10,000 or more. That typically includes freelancers, consultants, business owners, landlords with large rental income, and salaried people with big interest, capital gains or side income. Resident senior citizens (60+) without business income are exempt.
The instalment schedule
| Due date | Cumulative amount paid by then |
|---|---|
| 15 June | At least 15% of the year's tax |
| 15 September | At least 45% |
| 15 December | At least 75% |
| 15 March | 100% |
If you've opted for presumptive taxation for business or professional income, you can pay the entire amount in one instalment by 15 March.
Worked example
Advance tax = estimated tax for the year − TDS/TCS
Instalment k = advance tax × cumulative % − amount already paidMissing a date
If you pay less than the required cumulative amount by a due date, interest of about 1% a month is charged on the shortfall, and a separate interest applies if you've paid less than 90% of your tax by 31 March. Income that arrives unexpectedly, such as a large capital gain, can be paid for in the next instalment without interest as long as you pay promptly.
How to pay
Pay online through the Income Tax Department's e-Pay Tax service using challan type "Advance Tax", by net banking, UPI or card. Keep the challan details: you'll enter them in your return. Estimate your income as honestly as you can at each instalment; if it changes, adjust the next payment.
Not sure of your yearly tax? Work it out first on the income tax calculator or, for freelancers, the freelancer tax calculator.
Frequently asked questions
Do salaried people pay advance tax?
Usually not, because employers deduct TDS. But if you have significant other income, such as interest, rent or capital gains, and tax on it isn't covered, you may need to.
What if my income turns out lower than estimated?
You'll get a refund of any excess when you file your return.
Is advance tax required on capital gains?
Yes, once the gain happens. Pay it in the next due instalment to avoid interest.
Official references: Income Tax Department – e-Pay Tax