Understand Advance Tax
Learn who needs to pay advance tax, how the payment schedule works, how to calculate your estimated liability, and what happens when advance tax is paid late or falls short.
What is advance tax?
Advance tax is income tax paid during the year in instalments based on your estimated tax liability. Instead of waiting until the end of the year, eligible taxpayers pay tax progressively.
For salaried taxpayers, TDS often covers much of the tax liability. However, interest income, rental income, capital gains, business income or professional income can create an additional liability.
For Tax Year 2026–27, the Income Tax Department states that advance tax becomes applicable where the relevant calculated tax liability is ₹10,000 or more, subject to applicable provisions and exceptions.
When advance tax can apply
Start with your estimated annual tax liability, account for applicable TDS and other tax credits, and determine the remaining amount that may need to be paid as advance tax.
When can advance tax become important?
Advance tax is especially relevant when income outside regular salary increases your overall tax liability.
Interest Income
Interest from fixed deposits, savings accounts, bonds and other investments can increase your taxable income beyond salary TDS.
Rental Income
Rental income may create additional tax liability when your existing TDS does not fully cover your estimated tax.
Capital Gains
Gains from selling investments or other taxable assets can change your estimated tax liability during the financial year.
Advance tax payment schedule
For taxpayers following the regular instalment schedule, advance tax is paid progressively during the year. The cumulative targets are 15%, 45%, 75% and 100%.
First Instalment
15% cumulativeThe first instalment is generally at least 15% of the estimated advance-tax liability.
Second Instalment
45% cumulativeTotal advance tax paid should generally reach at least 45%.
Third Instalment
75% cumulativeThe cumulative advance tax payment should generally reach 75%.
Final Instalment
100% cumulativeThe regular schedule reaches the full estimated liability by this stage.
How is advance tax calculated?
Advance tax is broadly planned from your expected annual tax liability after considering applicable tax credits and taxes already paid.
This is an educational illustration, not a tax calculator. Actual tax depends on your income, deductions, tax regime, credits and applicable provisions.
Regular and presumptive taxation
The advance-tax schedule can differ depending on the applicable taxation provisions.
Regular advance tax
Taxpayers outside the applicable presumptive scheme generally follow the four-stage cumulative payment schedule.
Presumptive taxation
Eligible taxpayers using the applicable presumptive taxation provisions generally pay the entire advance-tax liability in one instalment by 15 March.
Advance tax vs TDS vs self-assessment tax
Knowing which tax payment you are making helps you maintain accurate records while preparing your Income Tax Return.
| PAYMENT | ADVANCE TAX | TDS | SELF-ASSESSMENT TAX |
|---|---|---|---|
| When? | During the tax year | When applicable payments are made | After final tax computation |
| Who pays? | Taxpayer | Deductor deposits tax | Taxpayer |
| Purpose | Pay estimated tax progressively | Collect tax at source | Pay remaining tax liability |
| Common examples | Business, rent, interest, capital gains | Salary, interest and other specified payments | Tax remaining before ITR submission |
How to pay advance tax online
Advance tax can be paid through the Income Tax Department's e-Pay Tax facility. Keep the payment details and challan safely for your tax records.
Open the Income Tax e-Filing portal
Access the e-Pay Tax service from the available tax-payment options.
Select the relevant payment
Choose the appropriate tax year and payment details.
Review the amount
Check the tax amount and payment information before proceeding.
Complete payment and retain proof
Save the challan and payment confirmation for future ITR reporting.
Keep your tax records organised
Advance tax paid during the year is relevant when your final tax liability is reconciled while preparing your Income Tax Return. Keep challans, payment dates and amounts available for your records.
Check ITR Documents →What happens if advance tax is paid late?
A shortfall or deferment in advance tax can lead to interest under the applicable provisions. For Tax Year 2026–27, the Income Tax Department states that the interest framework continues under the Income Tax Act, 2025.
The applicable calculation depends on the nature and timing of the shortfall, the tax already paid and your final tax position.
Advance tax mistakes to avoid
A few simple checks can make tax planning and ITR reconciliation much easier.
Ignoring additional income
Salary alone may not represent your complete taxable income.
Forgetting TDS
Consider TDS and other applicable credits before estimating the balance.
Missing due dates
Track the June, September, December and March payment milestones.
Not updating estimates
New income or capital gains can change your expected tax liability.
Losing challans
Keep payment records available for your Income Tax Return.
Confusing tax payments
Advance tax, TDS and self-assessment tax have different roles.
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Advance tax, explained simply.
Find quick answers about eligibility, due dates, payment, calculation and late-payment interest.
Advance Tax FAQs
Advance tax is income tax paid during the tax year in instalments based on estimated tax liability instead of waiting until the end of the year.
Generally, a taxpayer whose applicable estimated tax liability is ₹10,000 or more may need to pay advance tax, subject to the applicable provisions and exceptions.
Under the regular schedule, cumulative advance tax targets are 15% by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March.
Under the regular individual instalment schedule, at least 15% of the estimated advance-tax liability is payable by 15 June.
TDS can reduce the remaining tax liability when estimating advance tax because it is considered as tax already collected, subject to the applicable rules and available credit.
Capital gains can increase your estimated tax liability. If your resulting tax position falls within the advance-tax provisions, the additional liability should be considered.
Eligible taxpayers using the applicable presumptive taxation provisions generally pay 100% of their advance-tax liability in one instalment by 15 March.
Yes. The Income Tax Department provides an e-Pay Tax facility through the e-Filing portal for applicable tax payments.
No. Advance tax is generally paid during the tax year based on estimated liability, while self-assessment tax is generally paid after the final tax liability is determined.
Yes. Interest may apply for specified shortfalls or deferment of advance-tax payments under the applicable provisions.
Organise your tax payments before filing your ITR.
Review your income, TDS, advance tax and supporting records before completing your Income Tax Return.
FinancePilot provides general educational information and does not provide individual tax, legal, accounting or financial advice. Advance-tax liability depends on your income, tax credits, applicable provisions and individual circumstances. Verify your tax position with the official Income Tax Department or a qualified tax professional before making a payment or filing a return.