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Advance Tax Guide FY 2025-26 — Complete Guide for Taxpayers
If your estimated tax liability for the financial year, after deducting TDS/TCS, exceeds ₹10,000, you are required to pay advance tax. This is known as the "pay as you earn" scheme under the Income Tax Act.
Who Needs to Pay Advance Tax?
- Freelancers & Professionals: Earning without TDS or with low TDS (e.g., 10% under 194J vs actual 30% slab rate).
- Investors: Booking significant capital gains from stocks, mutual funds, real estate, or crypto.
- Salaried Employees with other income: E.g., rent, heavy FD interest, or dividend income where employer TDS falls short.
- Businesses: Small businesses under regular accounting or presumptive taxation.
Advance Tax Instalment Schedule FY 2025-26
| Instalment | Due Date | Cumulative % | Amount Due |
|---|---|---|---|
| 1st | 15 June 2026 | 15% | 15% of total tax |
| 2nd | 15 September 2026 | 45% | 30% of total tax |
| 3rd | 15 December 2026 | 75% | 30% of total tax |
| 4th | 15 March 2027 | 100% | 25% of total tax |
Senior Citizens Exemption: Senior citizens (age 60 or above) who do not have any income from business or profession are exempt from paying advance tax. They can pay self-assessment tax at the time of filing ITR.
Penalties for Missing Deadlines
Failure to pay advance tax on time attracts interest under two sections of the Income Tax Act:
- Section 234C (Interest on Deferment): 1% per month on the shortfall of each instalment.
- Section 234B (Interest on Default): 1% per month if the total advance tax paid by 31 March is less than 90% of your assessed tax. This runs from April 1 until you file your ITR.
How to Pay Advance Tax Online
Pay via Challan 280 on the e-Filing portal (incometax.gov.in). Select Tax Type: Advance Tax (100), Assessment Year: 2026-27. Payment can be made via net banking, UPI, or debit card. Keep the challan receipt safe — you'll need the BSR code and challan serial number while filing your ITR.
Also see: Income Tax Calculator to compare Old vs New regime, and Capital Gains Calculator to compute gains tax before planning advance tax payments.
Read the Full Guide
Discover 4 real-life examples of how taxpayers lost thousands in penalties because they ignored advance tax rules.
Read the Advance Tax GuideFAQ
Frequently Asked Questions
Common questions about advance tax for FY 2025-26.
Any taxpayer whose estimated tax liability for the year, after deducting TDS/TCS, exceeds ₹10,000 must pay advance tax. This commonly applies to freelancers, investors with capital gains, and salaried employees with significant non-salary income like rent or FD interest.
Advance tax is paid in 4 instalments: 15% by 15 June 2026, 45% cumulative by 15 September 2026, 75% cumulative by 15 December 2026, and 100% by 15 March 2027. These dates apply to all taxpayers except those opting for presumptive taxation under Section 44AD/44ADA, who can pay 100% by 15 March.
Two penalties apply: Section 234C charges 1% per month interest on the shortfall of each instalment. Section 234B charges 1% per month if total advance tax paid by 31 March is less than 90% of your assessed tax — this runs from April 1 until you file your ITR. Use the penalty estimator in the calculator above to see the exact impact.
Yes. Senior citizens (age 60+) who do not have any income from business or profession are exempt from paying advance tax. They can pay the entire tax as self-assessment tax at the time of filing their ITR. This exemption does not apply if they have business/professional income.
Pay via Challan 280 on the e-Filing portal (incometax.gov.in). Select Tax Type: Advance Tax (100), Assessment Year: 2026-27. Payment can be made via net banking, UPI, or debit card. Keep the challan receipt — you'll need the BSR code and challan serial number while filing your ITR.