Summary: Advance tax is income tax paid in installments throughout the financial year instead of a lump sum at year-end. It is applicable when a person’s tax liability exceeds ₹10,000. The payment is made in four instalments: June 15th (15% of total tax), September 15th (45%), December 15th (75%), and March 15th (100%). Senior citizens above 60, without business income, and those with TDS exceeding the tax liability are exempt from paying advance tax. For taxpayers under the presumptive tax scheme (Sections 44AD or 44ADA), the entire advance tax is paid by March 15th. Failure to pay on time leads to interest under Sections 234B and 234C. Payments can be made online through the Income Tax Department’s portal or offline via authorized bank branches using Challan No. ITNS 280. To pay online, individuals need to log into the e-filing portal, select “e-pay tax,” enter tax details, and complete the payment. After payment, an acknowledgment with the challan number is issued for reference. While online payment is mandatory for certain taxpayers, others can opt for offline methods. Timely advance tax payments help avoid penalties and ensure the taxpayer is not burdened with a large tax payment at year-end.
What is Advance Tax?
Advance tax is the form of income tax that is paid in advance instead of lump sum payment at the end of the financial year. This tax is paid in instalments based on the taxpayer’s income.
Eligibility:
It is payable when the tax liability of an individual exceeds Rs.10,000 in a given financial year. Notably, such a tax is paid in instalments on due dates and is paid in the same year the income is generated.
However, Following are the exemption for paying advance tax
- A resident senior citizen (i.e., an individual of the age of 60 years or above) not having any income from a business or profession.
- If the TDS deducted exceeds the tax payable for the year.
| Instalment | The due date for payment of advance tax | Amount |
| First | On or before June 15th of the previous year | Not less than 15% of advance tax |
| Second | On or before September 15th of the previous year | Not less than 45% of advance tax as reduced by the amount paid in the earlier instalment |
| Third | On or before December 15th of the previous year | Not less than 75% of the advance tax as reduced by the amount paid in earlier instalments |
| Fourth | On or before March 15th of the previous year | 100% of advance tax as reduced by the amount paid in the earlier instalments |
What are the instalments and due dates for payment of advance Tax?
Special Case for Presumptive Tax Scheme:
If a taxpayer declares their business or professional income under the presumptive tax scheme (Section 44AD or 44ADA), the entire advance tax must be paid by March 15th of the relevant financial year. In this case, 100% of the advance tax is paid in a single instalment.
Note: Any tax paid, on or before 31st March, shall also be treated as advance tax paid during the financial year.
What are the consequences of failure to deposit advance Tax?
If the assessee does not pay the advance tax in accordance with the specified due dates, he shall be liable to pay the following interest:
(a) Interest under section 234B for default in payment of advance tax
(b) Interest under section 234C for deferment of payment of advance tax.
How to Pay Advance Tax?
The advance tax can be paid Online (electronically) or offline (through an authorized bank) by submitting the details in Challan No. ITNS 280. However, it is mandatory for a Company or a person (other than a company) who is required to get his accounts audited under section 44AB to pay the taxes through online mode only.
Step 1 – Go to the e-filing portal of the Income Tax Department of India (https://www.incometax.gov.in).
Step 2 – Click on ‘e-pay Tax’ under ‘Quick Links’.
Step 3 – Enter your PAN and mobile number and click “Continue.”
Step 4 – Enter the OTP sent to your mobile and click “Proceed.”
Step 5 – Select “Income Tax” and click “Continue.”
Step 6 – Choose the “Assessment Year” and “Type of Payment” as ‘Advance Tax (100)’ and click “Continue.”
Step 7– Fill out the required tax details.
Step 8 – Choose the payment mode and select the bank, then click “Continue.”
Step 9 – Get a preview of the challan and next press the ‘Pay Now’ button.
Step 10 – After the payment is completed, an acknowledgment screen will appear with the BSR code and challan serial number. Save this for your tax return.
Alternatively, the tax payer can also pay advance tax by logging into his Income tax portal by following the steps mentioned below
Step 1: Login to the Income Tax e-Filing Portal (https://www.incometax.gov.in) using your credentials.
Step 2: On the Dashboard, click e-File > e-Pay Tax. You will be navigated to the e-Pay Tax. On the e-Pay Tax page, click the New Payment option to initiate the online tax payment.
Step 3: On the New Payment page, click Proceed on a tax payment tile applicable to you.
Step 4: After selecting the applicable Tax Payment tile, select Assessment Year, Minor head, other details (as applicable) and click Continue.
Step 5: On the Add Tax Breakup Details page, add the breakup of total amount of tax payment and click Continue.
Step 6: In the Select Payment Mode page, select Payment Gateway mode and click Continue.
Step 7: In the Preview and Make Payment page, verify the details and tax break up details and click Pay Now.
Step 8: Click Submit to Bank. It will directed to bank payment gateway do the payment.
After successful payment, you will receive a confirmation e-Mail and an SMS on the e-Mail ID and Mobile number registered with the e-Filing portal. Once the payment is successful, details of payment and Challan Receipt are available under Payment History Tab on the e-Pay Tax page.
Those who are not comfortable with this online advance tax payment method may use the offline payment facility by submitting the challan at the I.T. Department authorized bank branches.
Thus paying advance tax helps avoid interest charges and prevents the assessee from facing a large, last-minute tax payment.
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