Advance Tax Payment: Meaning, Process, Due Dates & Deductions for FY 2024-25

Updated: Aug 5

Advance tax is a pre-payment of income tax by individuals, businesses, and other entities on the basis of their predicted income for the financial year. This system ensures a continuous inflow of revenue to the government and assists taxpayers in managing their tax liabilities more appropriately. This will be an all-inclusive article to understand advance tax payment in India for FY 2024-25: who is required to pay, due dates, how to calculate, and the process for making the payment.

Table of Content

What is Advance Tax?

Who Should Pay Advance Tax?

Advance Tax Payment Due Dates for FY 2024-25

How to Calculate Advance Tax?

Example for Advance Tax Calculation under the New Tax Regime

What is Advance Tax Late Payment Interest?

Tax Payable v/s Tax Refundable

Benefits of Paying Advance Tax

Advance Tax Payment Status

Making Advance Tax Payments for Unpredictable Incomes

Minimum Advance Tax Payment by 31st March

Interest Calculation for Non-Payment of Advance Tax

How to Write a Cheque for Advance Tax Payment?

Downloading the Advance Income Tax Challan

Using the Advance Tax Calculator

Most Asked Questions

What is Advance Tax?

Advance tax is the income tax paid in advance and does not mean a lump sum that has to be paid at the end of a financial year. It's a "pay-as-you-earn" system, whereby the taxpayer is required to pay tax periodically at four intervals, based on one's own estimates of probable income during the year. This provision under the Indian Income Tax Act applies in respect of income arising from sources other than regular salary: like rental income, capital gains, lotteries, interest on fixed deposits, and so on.

Who Should Pay Advance Tax?

Advance tax is applicable to:

General Taxpayers: Salaried individuals, freelancers, and businesses will pay advance tax if their total tax liability comes to more than INR 10,000 in a financial year.
Senior Citizens: Any person who is 60 years or more and does not have business income is exempt from this advance tax payment.
Presumptive Taxation for Businesses and Professionals: Assessee paying tax under presumptive taxation provisions of Sections 44AD and 44ADA must pay advance tax in a single installment on or before 15th March or 31st March.

Advance Tax Payment Due Dates for FY 2024-25

Advance tax for the FY 2024-25 shall be paid as under:

On or before 15th June, 2024: 15% of the advance tax liability
By 15 September 2024: 45% of the advance tax liability (less the already paid amount)
By 15 December 2024: 75% of the advance tax liability less the amount already paid
By 15 March 2025: 100% of the advance tax liability less the amount already paid

In the case of Presumptive Taxation Scheme, the whole advance tax is payable on or before 15th March or 31st March.

How to Calculate Advance Tax?

The following steps have to be taken for advance tax calculation:

Estimate Total Income: Calculate total income for the financial year from all sources, such as capital gains, rental income, professional income, salary, and interest on fixed deposits.
Deduct Eligible Deductions: Subtract deductions available under sections like 80C for investments, 80D for medical insurance, and so on.
Compute Tax: The current tax slab rates are applied to the net income to compute the tax payable.
Subtract TDS: TDS already paid or likely to be deducted should be subtracted.

If the computed tax liability is more than INR 10,000, advance tax has to be paid.

Example for Advance Tax Calculation under the New Tax Regime

Consider Ajay, a freelancer whose gross receipt is estimated to be about INR 20,00,000 for FY 2024-25. His expenses have been estimated to be about INR 12,00,000, and he has investments and insurance payments eligible for deductions under section 80C and 80D. The advance tax calculation would turn out to be as follows:

Particulars	Amount
Gross Receipts	20,00,000
Less: Expenses	12,00,000
Income from Profession	8,00,000
Interest from Fixed Deposit	10,000
Gross Total Income	8,10,000
Tax Payable	42,000
Add: Education Cess @4%	1,680
Total Tax	43,680
Less: TDS	30,000
Advance Tax Payable	13,680

The advance tax installments would then be divided accordingly.

Advance Tax Payment: How to Pay Online?

Payment of advance tax online is done through the following steps:

Visit the e-filing portal of the Income Tax Department of India.
Click on 'e-Pay Tax' under the 'Quick Links' option.
Provide your PAN, confirm it, and give your mobile number.
Enter OTP sent on your mobile.
Choose the tax applicable under 'Income Tax' and proceed.
Choose the type of payment as '100' for 'Advance Tax for 100'.
Now enter the tax amounts and choose the payment method.
Preview the details of the challan and click on 'Pay Now'.
Keep the tax receipt safely, as the same may be required in future.

What is Advance Tax Late Payment Interest?

Interest on late payments of advance tax is charged u/s 234B and 234C as under:

Section 234B: If by the end of the financial year, namely, 31st March, an assessee has not paid at least 90% of his tax liability - interest at 1% pm is levied on the unpaid amount of tax.
Section 234C: When the payment of advance tax is delayed, interest is computed at the rate of 1% per month for certain durations, as per the number and type of due dates.

Tax Payable v/s Tax Refundable

This implies that after paying advance tax, if excess or short tax is determined at the end of the financial year after getting credited from TDS and advance tax paid then the assessee has tax payable or tax refundable. The adjustment surely secures the truth of tax payment, and the lump sum payments are done away with.

Benefits of Paying Advance Tax

Paying advance tax benefits the government and taxpayers.

For the Government: Ensures the continuous flow of payment throughout the year.
For Taxpayers: Reduces the stress of a huge lump sum reversal of tax at year-end and prevents even the slightest interest rate or penalties imposed on the grounds of default or delay in the payment of tax.

Advance Tax Payment Status

The status of the advance tax paid can be checked with the receipt of the:

Visit TIN NSDL site and use CIN-based view.
Enter the details as required.
Click to proceed further and check the status.
Or you may log into your e-filing account at the e-filing portal of the Income Tax Department and check out your Form 26AS.

Making Advance Tax Payments for Unpredictable Incomes

Incomes like capital gains or lottery winnings, which are tricky to anticipate, the advance tax can be paid in the remaining installments or on or before 31st March. This will prevent the charge of interest for underpayment.

Minimum Advance Tax Payment by 31st March

At least 90% of total tax has to be paid before March 31, otherwise 1% interest per month on the outstanding amount will be charged, levied from the date of default till the date of payment.

Interest Calculation for Non-Payment of Advance Tax

Interest on non-payment of advance tax is levied at 1% per month under Section 234C. Thus if the amount paid by June 15 is less than 15% of the total liability 1% interest per month for three months would be charged on the deficiency.

How to Write a Cheque for Advance Tax Payment?

At the time of issuing a cheque for advance tax payment, the following points should be kept in mind:

A separate challan is to be used for each type of payment.
Quote your PAN accurately to avoid penalties.
Ensure that the bank's acknowledgement contains BSR code, date of deposit and Challan serial number.