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Advance tax is pay-as-you-earn for non-salaried income. Missing it costs 1% per month in interest. Most freelancers, investors, and business owners are unaware until they face a ₹20,000–80,000 interest bill at filing.
Advance tax, notices, deductions · Advance Tax
Who Must Pay Advance Tax
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Provisions
Sec 207; Sec 208; Sec 209; Sec 424 (old 234B); Sec 425 (old 234C)
Analysis
Who is exempt: Senior citizens (60+ years) with NO business income are fully exempt from advance tax. Their entire liability is paid as self-assessment tax at filing. Important: senior citizen with rental income from property + business = NOT exempt. Salaried with only salary income: Employer deducts TDS monthly. If estimated TDS equals full liability, no advance tax needed. But if you have FD interest, MF dividends, or freelance income on the side, check if advance tax applies. Presumptive taxpayers (Sec 58, Income-tax Act 2025, old Sec 44AD/44ADA): Pay entire advance tax in ONE instalment by March 15. Skip quarterly, just one payment by March 15. LTCG/STCG, special rule: Capital gains arising after March 15, pay entire tax by March 31, no Sec 425 (old Sec 234C) interest. Capital gains arising in Q3? Pay tax in Q4 instalment, not retrospectively in Q3.
Close
- Estimate total income from all sources for the financial year (April to March)
- Reduce standard deduction (₹75K salaried) and all eligible deductions (Sec 123, 126 (old Sec 80C, 80D), etc.)
- Compute tax on estimated taxable income using applicable regime and slabs
- Deduct expected TDS for the year from this tax figure
- If balance exceeds ₹10,000 → advance tax applies
- Pay 15% of estimated tax by June 15 (Q1)
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