Advance tax is income tax paid during the financial year in instalments, rather than as a lump sum at the end. Anyone whose tax liability for the year exceeds ₹10,000 (after TDS) must pay it.
This guide explains who must pay advance tax, the due dates, and the interest for shortfalls.
What is Advance Tax?
Advance tax follows a 'pay-as-you-earn' model. Salaried employees usually have it covered through TDS, but those with business income, capital gains, interest or rental income often need to pay advance tax.
Missing instalments triggers interest under Sections 234B and 234C.
| Who pays | Anyone with tax liability over ₹10,000 after TDS |
|---|---|
| 15 June | 15% of estimated tax |
| 15 September | 45% cumulative |
| 15 December | 75% cumulative |
| 15 March | 100% of estimated tax |
Frequently asked questions
Do salaried employees pay advance tax?
Usually not on salary, since TDS covers it — but they must pay advance tax on other income like capital gains or interest if the liability exceeds ₹10,000.
What is interest under 234C?
Interest for deferment of advance tax instalments — charged when you pay less than the prescribed percentage by each due date.