Advance tax payments are split into four installments with specific due dates: 15% by June 15, 45% by September 15, 75% by December 15, and 100% by March 15.
All taxpayers whose estimated tax liability exceeds Rs 10,000 are required to pay advance tax according to specific schedules, rather than waiting until the end of the financial year. For FY 2024-25 (AY 2025-26), the second installment of advance tax was due on or before September 15, 2024. If you missed this deadline, the Income Tax Department will impose interest on any delayed payments.
Read More: Income Tax Benefits: Know How Your Wife Can Save Rs 7 Lakh, 3 Easy Ways
Advance tax involves paying tax on your estimated income in installments throughout the financial year, instead of a single lump sum at year-end. These payments are split into four installments with specific due dates: 15% by June 15, 45% by September 15, 75% by December 15, and 100% by March 15.
Shefali Mundra, Tax Expert at ClearTax, provides clarity on who is required to pay advance tax. According to Mundra, while senior citizens are generally exempt from advance tax obligations, individuals and entities with business income must fulfill this requirement. Specifically, businesses and professionals operating under presumptive taxation schemes are required to settle their entire advance tax liability by March 15 each year.
Read More: Are all gifts taxable in India? Discover the rules that apply
How much extra will you pay for missing the advance tax deadline?
If you miss the advance tax deadline, you may be liable to pay interest on the outstanding amount based on the specific circumstances of your case. Interest can be charged under sections 234A, 234B, and 234C.
Interest Under Section 234A: This interest is applied if a taxpayer fails to file their Income Tax Return (ITR) by the due date, including in cases of belated or updated returns.
“If the taxpayer filed her return of income after the due date prescribed u/s 139 (1) or the extended due date as the case may be, interest u/s 234A will be charged at 1% per month or part of the month on the amount of tax payable by the taxpayer as on the due date. Hence, it is requested that interest u/s 234A is computed correctly,” said the Income Tax Department website.
Interest Under Section 234B: If you pay less than 90% of your total tax liability as advance tax, interest will be charged at 1% per month on the shortfall from April 1 of the assessment year until your total income is assessed. Make sure to calculate this interest correctly when filing your tax return.
Read More: Income Tax: How can a middle-class salaried employee optimise for taxes?
Paying advance tax is straightforward via the e-filing portal of the Income Tax Department, says Shefali Mundra as she advises that taxpayers can easily make payments by following these steps:
Access the Portal: Visit the Income Tax Department’s e-filing portal.
Navigate to Payment: Click ‘e-Pay Tax’ under ‘Quick Links’ or use the search bar.
Enter Details: Provide your PAN, confirm it, and enter your mobile number. Click ‘Continue’.
Authenticate: Input the 6-digit OTP sent to your mobile and proceed.
Select Tax Type: Choose ‘Income Tax’ and click ‘Proceed’.
Specify Details: Select ‘Assessment Year’ (e.g., 2025-26) and ‘Type of Payment’ as ‘Advance Tax (100)’. Click ‘Continue’.
Input Tax Amount: Fill in your tax details.
Choose Payment Method: Pick a payment method and your bank.
Verify & Pay: Review the challan details, edit if necessary, and confirm payment.
