Who has to pay advance tax and when?

By the India Law Simplified editorial team · Verified against the bare Acts & official portals · Updated 2026-07-28 · ~4 min read

⚡ Quick answer

You must pay advance tax — tax paid during the year rather than at the end — if your total tax liability for the year, after subtracting TDS, is ₹10,000 or more. It's paid in four instalments: 15% by 15 June, 45% (cumulative) by 15 September, 75% by 15 December and 100% by 15 March. Resident senior citizens with no business income are exempt. Paying short or late attracts interest under Sections 234B and 234C.

Estimate advance tax interest free →

Most salaried people never think about advance tax because their employer's TDS handles it. But the moment you earn income that isn't fully covered by TDS — capital gains, rent, interest, freelance or business income — the 'pay-as-you-earn' rule kicks in, and missing it quietly adds interest to your bill. This guide explains who has to pay advance tax, the exact instalment dates and percentages, how the interest is calculated, and how to avoid it.

1Who has to pay it

The rule is simple: if your net tax for the year (after TDS already deducted) is ₹10,000 or more, you must pay advance tax during the year. In practice:

Salaried employees whose TDS fully covers their tax usually don't need to — the employer handles it.
But add significant non-salary income — capital gains, rental income, FD interest, dividends, freelance or business income — and you often cross ₹10,000 of uncovered tax and must pay.
Resident senior citizens (60+) with no income from business or profession are exempt.

2The instalment calendar

Advance tax is paid in four instalments through the year. Each deadline is a cumulative percentage of your estimated total tax:

By 15 June: 15%
By 15 September: 45% (cumulative)
By 15 December: 75% (cumulative)
By 15 March: 100%

⚠️ ImportantTaxpayers under the presumptive scheme (44AD/44ADA) get a simpler deal — they pay the entire advance tax in a single instalment by 15 March.

3How the interest works (234B and 234C)

Miss the targets and two separate interests can apply, both at 1% per month:

Section 234C — for missing or underpaying an individual instalment by its due date.
Section 234B — if you pay less than 90% of your total tax by the end of the year (31 March), charged from April until you pay.

💡 ExampleSneha sold shares in August for a ₹3 lakh gain, with ₹45,000 tax on it, but paid nothing in advance. Because she missed the September, December and March instalments, she owes 234C interest on each shortfall, plus 234B interest from April until she pays the ₹45,000 with her return — easily a few thousand rupees that a timely advance-tax payment would have avoided.

4How to pay and avoid the interest

Estimate your total income for the year, compute the tax, subtract expected TDS, and if the balance is ₹10,000+, pay it in the instalments above. Pay online via the income-tax portal's e-Pay Tax (challan, minor head 100 for advance tax).

If you realise late that you owe — for example after a one-off capital gain — pay it as soon as possible. Paying before 31 March still avoids 234B; paying any self-assessment tax before filing stops further interest from accruing.

✅ TipHad a big one-off gain (property, shares, crypto)? Don't wait for the year-end — pay advance tax in the very next instalment to cap the 234C/234B interest.

Key takeaways

Pay advance tax if your tax after TDS is ₹10,000 or more for the year.
Instalments: 15% by 15 Jun, 45% by 15 Sep, 75% by 15 Dec, 100% by 15 Mar.
Resident senior citizens with no business income are exempt.
Presumptive (44AD/44ADA) taxpayers pay it all in one shot by 15 March.
Shortfalls attract 1%/month interest under 234C (per instalment) and 234B (under 90% by year-end).

Frequently asked questions

What happens if I don't pay advance tax?

You pay interest under Section 234B (for paying less than 90% by year-end) and Section 234C (for missing instalment deadlines), both at 1% per month on the shortfall. Pay any balance as self-assessment tax before filing to stop further interest.

Do salaried people have to pay advance tax?

Usually not, if their employer's TDS covers their tax. But if you have extra income — capital gains, rent, interest, freelance work — that pushes your uncovered tax to ₹10,000 or more, you must pay advance tax on it.

I had a one-time capital gain — when do I pay advance tax on it?

Pay it in the advance-tax instalment falling due after the gain arose. The law allows the relevant instalment to absorb the gain, so paying in the next due instalment limits 234C interest.

Can I pay all my advance tax in March?

Salaried and most taxpayers should follow the four instalment dates to avoid 234C interest. Only presumptive taxpayers under 44AD/44ADA are allowed to pay the entire amount by 15 March without 234C.