If you are an Indian taxpayer with income beyond simple salary deductions, you may have heard of Advance Tax. This is not an optional contribution; it is a mandatory obligation under the Income Tax Act, 1961.

Since this article accompanies an Advance Tax Calculator, our goal is simple: to clearly explain who needs to pay, when they need to pay it, and what happens if they don’t, ensuring you stay compliant for the current Financial Year 2025-26 (Assessment Year 2026-27).

What is Advance Tax ?

If you are an Indian taxpayer with income beyond simple salary deductions, you may have heard of Advance Tax. This is not an optional contribution; it is a mandatory obligation under the Income Tax Act, 1961.

Since this article accompanies an Advance Tax Calculator, our goal is simple: to clearly explain who needs to pay, when they need to pay it, and what happens if they don’t, ensuring you stay compliant for the current Financial Year 2025-26 (Assessment Year 2026-27).

Who must pay Advance Tax ?

Any taxpayer whose estimated tax liability for the financial year is ₹10,000 or more must pay Advance Tax. To calculate advance tax all sources of income, including Interest, Capital Gains, Income from House Property (rental income), and Business/Professional Income are considered.

Exemptions

You do not need to pay Advance Tax if you fall into one of these categories:

• Senior Citizens ( 60 Years or older) : Individuals who are 60 years or older and do not have any income chargeable under the head ‘Profits and Gains of Business or Profession’ are exempt.

• Salaried Employees: If the only income source is salary, the TDS (Tax Deducted at Source) deducted by your employer usually covers your tax liability, and you generally won’t need to pay Advance Tax. However, if you have significant additional income (like high interest or capital gains), you must comply.

Advance Tax Due Dates & Installments (FY 2025-26)

For most individual and corporate taxpayers, Advance Tax must be deposited in four installments throughout the financial year, based on a cumulative percentage of the total tax liability.

Note:

Any tax paid between March 16th and March 31st is technically considered Advance Tax, but paying before March 15th helps avoid interest under Section 234C.

Special Rule for Presumtive Taxation

If you are a taxpayer who has opted for the Presumptive Taxation Scheme under Section 44AD or Section 44ADA (for businesses and professionals with turnover/receipts below the specified limits), the installment schedule is much simpler: 100% of the Advance Tax liability must be paid in a single installment on or before March 15.

Penalty for Non-Compliance

Failing to pay or deferring your Advance Tax payments attracts mandatory simple interest under sections 234B & 234C.

You are liable for interest under Section 234B if:

• The Advance Tax you paid is less than 90% of your Assessed Tax (the final tax liability determined during assessment).

• You did not pay any Advance Tax.

Section 234C: Interest for Deferment (Missing Installments)

Interest under Section 234C is charged if you fail to pay the mandated percentage of tax by the specified due date in the quarterly schedule.

Advance Tax compliance is crucial for avoiding unnecessary interest costs. The primary challenge is accurately estimating your income at the beginning of the year.

This is where Advance Tax calculator becomes invaluable. Use it regularly throughout the year, especially before each due date, to reassess your liability based on your current earnings. This proactive approach will help you make timely and accurate payments, ensuring full compliance and peace of mind.