As the financial year nears its end, taxpayers have one important date to keep in mind. March 15 is the deadline to pay the fourth and final instalment of advance tax for the financial year 2025–26. If you still have any pending tax liability, it must be cleared by this date to avoid interest charges later.
Advance tax simply means paying income tax in instalments during the year instead of paying the entire amount while filing the income tax return. This system ensures that taxes are paid gradually as income is earned, rather than all at once at the end of the financial year.
Who Is Required to Pay Advance Tax?
Advance tax becomes compulsory when a taxpayer’s total tax liability for the financial year exceeds Rs 10,000 after adjusting TDS (Tax Deducted at Source), TCS (Tax Collected at Source), and available tax credits.
This rule mainly applies to people whose income is not fully covered by TDS. For instance, freelancers and consultants often receive payments without tax deduction, which means they may have to calculate and pay advance tax themselves. Similarly, business owners and professionals running their own practice are also usually required to pay advance tax during the year.
It may also apply to people earning from other sources such as capital gains from shares or mutual funds, rental income from property, or interest from deposits and investments, provided their total tax liability crosses the Rs 10,000 limit.
In some cases, even salaried employees may need to pay advance tax. This usually happens when they earn additional income that is not fully covered by TDS, such as profits from stock market investments, cryptocurrency trading, rental income, or earnings from side businesses.
Exemption for Senior Citizens
There is an important relief available for senior citizens. Resident individuals aged 60 years or above are not required to pay advance tax, provided they do not have income from a business or profession. This means that if their earnings mainly come from sources such as pension, interest, or rent, they can pay their tax while filing the income tax return instead of making advance tax payments during the year.
How to Pay Advance Tax Online
Taxpayers can easily pay advance tax through the Income Tax Department’s e-filing portal using Challan ITNS-280. Follow these simple steps:
– Visit the Income Tax e-filing portal and select the ‘e-Pay Tax’ option.
– Enter and verify your PAN details.
– Choose the relevant assessment year.
– Select ‘Advance Tax (100)’ as the payment type.
– Complete the payment using net banking, debit card, or other available online methods.
Important: Companies and taxpayers whose accounts are audited under Section 44AB are required to pay advance tax only through the online mode.
The online payment system has been introduced to make the process faster, simpler, and less prone to errors.
What Happens If You Miss the Advance Tax Deadline
Failing to pay advance tax on time can lead to interest charges under Sections 234B and 234C of the Income Tax Act. Taxpayers may have to pay 1% interest per month or part of a month if there is a delay in payment or if the amount paid is less than the required advance tax.
Section 234C applies when a taxpayer misses an advance tax instalment or pays less than the required amount during the year.
Section 234B applies if less than 90% of the total tax liability is paid by the end of the financial year.
With the March 15, 2026 deadline for the final instalment approaching, experts advise taxpayers to review their income and clear any pending advance tax. Doing so can help avoid extra interest charges and make the income tax return filing process smoother at the end of the financial year.
Penalty for Missing the Advance Tax Due Date
If a taxpayer fails to pay advance tax by the prescribed deadline, interest may be levied under Sections 234B and 234C of the Income Tax Act.
Taxpayers who miss an instalment or pay less than the required amount may have to pay interest at the rate of 1% per month on the unpaid tax amount.
In addition, if less than 90 per cent of the total tax liability is paid by March 15, interest under Section 234B may also apply. This interest continues to be charged on the remaining unpaid amount until the tax dues are fully cleared.
Advance Tax Payment Schedule for FY 2025–26
The Income Tax Department has set four instalments during the financial year for taxpayers to pay their estimated advance tax. These payments are spread across the year so that tax can be cleared gradually instead of paying the entire amount at once.
Here is the advance tax schedule for FY 2025–26:
June 15: Pay at least 15% of the total estimated tax liability
September 15: Pay 45% of the total tax liability
December 15: Pay 75% of the total tax liability
March 15: Pay 100% of the total tax liability (final instalment)
This structured schedule helps taxpayers manage their tax payments throughout the year and reduces the burden of a large payment at the end of the financial year.
