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Advance Tax Payment FY 2024-25 & FY 2025-26: Your Complete Guide to Calculation, Due Dates, and Online Payment

  • Writer: PRITI SIRDESHMUKH
    PRITI SIRDESHMUKH
  • Jun 20
  • 14 min read

Advance tax payment is a system where individuals and companies pay their Income Tax in installments during the financial year. This method helps both the taxpayer and the Government of India. For taxpayers, it means not having to pay a large sum at year-end. For the government, it ensures a steady flow of revenue. This guide will explain who needs to pay advance tax, how to calculate it, the payment due dates, potential penalties, and the benefits for Financial Year 2024-25 and Financial Year 2025-26. Understanding your advance tax obligations helps in avoiding penalties and supports smooth tax compliance, a crucial part of filing your income tax return. TaxBuddy, with its expertise in taxation, aims to simplify these concepts for every taxpayer.

Table of Contents

What is Advance Tax? Understanding the "Pay-As-You-Earn" System

Advance tax meaning refers to paying your income tax in parts throughout the financial year, instead of all at once when the year ends. This "pay-as-you-earn" tax system is a requirement under the Income Tax Act, 1961. The government benefits from this system because it receives a consistent stream of revenue, which helps in funding public services. For an assessee (the taxpayer), paying advance tax makes managing money easier and lessens the shock of a large tax bill at the end of the financial year. Section 208 of the Income Tax Act, 1961 details the mandate for advance tax payment, forming a key part of effective tax planning.


Who is Liable to Pay Advance Tax in India?

Knowing who should pay advance tax is crucial for compliance. The primary rule for advance tax applicability is straightforward: if your total tax liability after deducting TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) is ₹10,000 or more in a financial year, you must pay advance tax. This advance tax limit applies to various types of taxpayers.


  • Salaried individuals need to consider advance tax for salaried employees if they earn income from other sources not fully covered by TDS. This extra income could be from renting out a property, interest from savings, or capital gains.

  • Freelancers and Professionals who earn income through their services must pay advance tax if their net tax liability meets the threshold.

  • Businesses and Companies, including Hindu Undivided Family (HUF) entities, are also required to pay advance tax based on their estimated profits.

  • NRIs (Non-Resident Indians) have to pay advance tax on income that they earn or that accrues in India, provided their tax liability exceeds ₹10,000. Understanding taxation for NRIs is important in these cases.


Section 208 of the Income Tax Act clearly states the ₹10,000 threshold for advance tax liability.


Exemptions from Paying Advance Tax

There are specific advance tax exemption scenarios. Resident Senior Citizens, meaning individuals who are 60 years of age or older during the financial year, are not required to pay advance tax. This exemption applies only if they do not have any income from Business or Profession. Section 207 of the Income Tax Act outlines this benefit. Also, any taxpayer whose tax liability, after considering TDS, is less than ₹10,000, has no advance tax obligation.


Advance Tax Due Dates for FY 2024-25 (AY 2025-26) and FY 2025-26 (AY 2026-27)

Meeting advance tax due dates is vital to avoid interest. For both corporate and non-corporate assessees (excluding those under presumptive taxation schemes), the advance tax payment schedule involves several installments throughout the Financial Year 2024-25 (corresponding to Assessment Year 2025-26) and Financial Year 2025-26 (corresponding to Assessment Year 2026-27). It's important to note that any tax paid up to 31st March of the financial year is considered advance tax. These deadlines are critical, as per Income Tax Department guidelines. Keeping track of these important tax deadlines is essential.


Here's a table showing the advance tax installments for FY 2024-25 and FY 2025-26:

Due Date (FY 2024-25 / FY 2025-26)

Percentage of Advance Tax Payable

On or before 15th June

Not less than 15%

On or before 15th September

Not less than 45% (less tax already paid)

On or before 15th December

Not less than 75% (less tax already paid)

On or before 15th March

100% (less tax already paid)

Special Due Date for Taxpayers Under Presumptive Taxation Schemes

A special rule applies for advance tax for presumptive income. Taxpayers who choose presumptive taxation schemes under Section 44AD (for Business) or Section 44ADA (for Profession) have a different due date. They need to pay 100% of their advance tax liability by the 15th of March of the financial year. They also have the option to pay this entire amount by the 31st of March. This is a significant difference from the regular installment schedule and is important for those utilizing presumptive taxation schemes.


How to Calculate Advance Tax Liability: A Step-by-Step

Knowing how to calculate advance tax is the first step towards timely payment. The advance tax calculation steps involve estimating your income and then figuring out the tax due. It’s important to make an accurate estimation to avoid issues later.


Step 1: Estimate Annual Income. First, gather estimates of your Gross Total Income from all sources for the financial year. This includes Salary, House Property income, Business/Profession profits, Capital Gains, and Other Sources like interest or dividends.


Step 2: Deduct Eligible Deductions. Next, subtract deductions you are eligible for under Chapter VI-A of the Income Tax Act. These often include popular deductions like those under Section 80C (for investments like LIC, PPF), Section 80D (for health insurance premiums), etc.


Step 3: Arrive at Net Taxable Income. After subtracting deductions from your Gross Total Income, the amount you get is your Net Taxable Income.


Step 4: Calculate Income Tax. On this Net Taxable Income, calculate the Income Tax payable. You should use the applicable income tax slabs for the current financial year. Remember to consider whether you are opting for the Old Tax Regime or the New Tax Regime, as the slab rates differ. Also, add any applicable Surcharge and the Health and Education Cess (currently 4%) to the tax amount.


Step 5: Deduct TDS/TCS. From the total tax calculated in Step 4, subtract the Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) that has already been deducted or collected, or is expected to be.


Step 6: Determine Advance Tax Liability. The figure you arrive at after deducting TDS/TCS is your advance tax liability for the year. If this amount is ₹10,000 or more, you need to pay advance tax. You can use our Income Tax Calculator.


Example Calculation of Advance Tax

An advance tax calculation example can make this clearer. Let's consider two scenarios. (Note: These examples are for illustration; actual tax may vary based on specific details and chosen tax regime.)


Example 1: Salaried Individual with Other Income (Assuming New Tax Regime for FY 2024-25) Ms. Priya has an annual salary of ₹12,00,000. She also expects interest income of ₹50,000 and short-term capital gains of ₹1,00,000. Her employer will deduct TDS on her salary, say ₹75,000.


  • Estimated Annual Income:

  • Salary: ₹12,00,000

  • Interest Income: ₹50,000

  • Capital Gains (Short Term): ₹1,00,000

  • Gross Total Income: ₹13,50,000

  • Deductions (New Regime - limited deductions, assuming none here for simplicity): ₹0

  • Net Taxable Income: ₹13,50,000

  • Calculate Income Tax (Illustrative New Regime Slabs FY 2024-25):

  • Up to ₹3,00,000: Nil

  • ₹3,00,001 to ₹6,00,000 (₹3,00,000 @ 5%): ₹15,000

  • ₹6,00,001 to ₹9,00,000 (₹3,00,000 @ 10%): ₹30,000

  • ₹9,00,001 to ₹12,00,000 (₹3,00,000 @ 15%): ₹45,000

  • ₹12,00,001 to ₹13,50,000 (₹1,50,000 @ 20%): ₹30,000

  • Total Tax: ₹1,20,000

  • Health & Education Cess (4% of ₹1,20,000): ₹4,800

  • Total Tax Liability: ₹1,24,800

  • Deduct TDS: ₹75,000 (on salary)

  • Advance Tax Liability: ₹1,24,800 - ₹75,000 = ₹49,800


Since ₹49,800 is more than ₹10,000, Ms. Priya must pay advance tax.


  • 1st Installment (by June 15): 15% of ₹49,800 = ₹7,470

  • 2nd Installment (by Sept 15): 45% of ₹49,800 = ₹22,410 (less ₹7,470 already paid) = ₹14,940

  • 3rd Installment (by Dec 15): 75% of ₹49,800 = ₹37,350 (less ₹22,410 already paid) = ₹14,940

  • 4th Installment (by Mar 15): 100% of ₹49,800 = ₹49,800 (less ₹37,350 already paid) = ₹12,450


Example 2: Freelancer (Assuming Old Tax Regime with Deductions for FY 2024-25) Mr. Raj is a freelancer expecting professional fees of ₹10,00,000. He plans for deductions under Section 80C of ₹1,50,000. No TDS is deducted on his income.


  • Estimated Annual Income (Professional Fees): ₹10,00,000

  • Deductions (Sec 80C): ₹1,50,000

  • Net Taxable Income: ₹10,00,000 - ₹1,50,000 = ₹8,50,000

  • Calculate Income Tax (Illustrative Old Regime Slabs FY 2024-25):

  • Up to ₹2,50,000: Nil

  • ₹2,50,001 to ₹5,00,000 (₹2,50,000 @ 5%): ₹12,500

  • ₹5,00,001 to ₹8,50,000 (₹3,50,000 @ 20%): ₹70,000

  • Total Tax: ₹82,500

  • Health & Education Cess (4% of ₹82,500): ₹3,300

  • Total Tax Liability: ₹85,800

  • Deduct TDS: ₹0

  • Advance Tax Liability: ₹85,800


Mr. Raj must pay advance tax of ₹85,800 in installments.


Advance Tax for Unpredictable Income

Dealing with advance tax for irregular income like Capital Gains, Lottery Winnings, or fluctuating Freelance Income can be tricky. The Income Tax Department understands that you can't always predict this income perfectly. If you receive such income after an installment due date has passed, you should pay the advance tax on capital gains or other such earnings in the subsequent installments. If your overall income changes significantly during the year, it's wise to re-calculate your advance tax liability and adjust the amounts in the upcoming installments. This approach helps manage fluctuating income advance tax obligations effectively and can be crucial for understanding the taxation of capital gains.


How to Pay Advance Tax Online: Step-by-Step Process

Knowing how to pay advance tax online is essential for timely compliance. The process to e pay advance tax is done through the official Income Tax e-Filing portal. Here’s a step-by-step guide, updated for the latest Income Tax Portal interface as of June 2025.


  • Visit the Portal: Go to the official Income Tax e-Filing portal.

  • Navigate to e-Pay Tax: On the homepage, find and click on the 'e-Pay Tax' option. This is usually under "Quick Links" or a similar prominent section.

  • Enter PAN and Mobile Number: You will be asked to enter your PAN (Permanent Account Number) and your mobile number. Confirm your PAN. An OTP will be sent to your mobile.

  • OTP Verification: Enter the OTP received to proceed.

  • Select Payment Category: After OTP verification, you will see options for different types of tax payments. Click on 'Proceed' for the 'Income Tax' option.

  • Choose Assessment Year and Payment Type: Select the correct Assessment Year (AY) for which you are paying the advance tax. For example, for income earned in FY 2024-25, the AY is 2025-26. Then, under 'Type of Payment (Minor Head)', choose '(100) Advance Tax'.

  • Fill Challan 280 Details: The system will guide you to fill in the details that are part of what used to be Challan 280. You will need to confirm tax applicable (Major Head: 0021 for Income-tax on companies (Corporation Tax) or 0020 for Income-tax (Other than Companies)). The minor head for Advance Tax is 100. Enter the tax amount.

  • Choose Payment Method: Select your preferred mode of payment: Net Banking, Debit Card, Credit Card, UPI, or 'Pay at Bank Counter' (for offline payment at a bank branch). Follow the instructions for your chosen method.

  • Download Challan Receipt: After successful payment, a challan receipt containing the Challan Identification Number (CIN) and other payment details will be generated. Download this receipt and save it securely. This is your proof of payment. Making your income tax portal advance tax payment correctly is vital, and understanding Challan 280 is part of that.


Understanding Challan 280 for Advance Tax Payment

The term challan 280 advance tax refers to the form historically used for paying direct taxes, including advance tax. While the new portal integrates this into the e-payment process, the core information required remains similar. Key fields to fill correctly include your Permanent Account Number (PAN), the correct Assessment Year (AY), selecting 'Advance Tax' (Minor Head 100) as the type of payment, and ensuring the Major Head (0021 for individuals/non-companies or 0020 for companies) is accurate. Keeping the e-receipt or the bank's counterfoil (if paid offline) safe is very important for your records and for filing your income tax return.


Penalties for Non-Payment or Short Payment of Advance Tax

Failing to pay advance tax or paying less than the required amount can lead to interest penalties. The Income Tax Act has specific sections that deal with penalty for advance tax.


Interest under Section 234C: This interest applies for the deferment of advance tax installments. If you don't pay the minimum required percentage by each due date, interest under Section 234C is levied at 1% per month on the shortfall amount for a period of 3 months (or 1 month for the shortfall in the last installment due by 15th March).


Interest under Section 234B: This interest applies for default in payment of advance tax. If the total advance tax paid by the 31st of March is less than 90% of your 'assessed tax' (total tax liability determined after processing your return), interest under Section 234B is charged. This interest is also 1% per month on the amount of shortfall (Assessed Tax minus Advance Tax Paid). This interest calculation starts from April 1st of the Assessment Year until the tax is fully paid.


It is also worth noting Section 234A, which charges interest for delay in filing your Income Tax Return (ITR). If self-assessment tax is due and that payment is delayed because the ITR filing is delayed, Section 234A interest can also apply. Avoiding these interest charges is a key reason to be diligent about advance tax default. Understanding these consequences of tax default is crucial.


Here's a summary of Section 234B versus 234C:

Section

Trigger

Interest Rate

Period

234C

Deferment/shortfall in paying quarterly installments

1% per month

3 months (or 1 month for March installment) on shortfall in installment.

234B

Total advance tax paid by 31st March < 90% of assessed tax

1% per month

From April 1st of AY until payment, on (Assessed Tax - Advance Tax Paid).

What to Do If You Miss an Advance Tax Due Date?

If you have a missed advance tax payment, you should pay the due amount as soon as possible. This action helps to minimize the further accumulation of interest, especially under Section 234C for that particular installment. While the interest for the missed installment will apply, making subsequent payments on time and ensuring that at least 90% of the total tax liability is paid by March 31st can help prevent or reduce interest under Section 234B. If you forgot to pay advance tax, acting quickly is the best approach for late advance tax payment.


Benefits of Paying Advance Tax on Time

There are several benefits of advance tax payment when done correctly and on time. Paying advance tax on time primarily helps you avoid interest and penalties under Section 234B and Section 234C of the Income Tax Act. It also reduces the stress of a large, lump-sum tax payment when you file your income tax return.


Moreover, the importance of advance tax payment extends to better financial planning and cash flow management for the taxpayer. It ensures you are compliant with the tax laws, contributing your share to government revenue throughout the year, which the government uses for public services. These advantages of paying advance tax make it a sensible practice.


Advance Tax Refund and Interest on Excess Payment

Sometimes, the advance tax paid might be more than your actual tax liability for the year, as determined when you file your Income Tax Return (ITR). If you've made an excess advance tax paid, you are eligible for an advance tax refund. The Income Tax Department will refund this extra amount.


Furthermore, under Section 244A of the Income Tax Act, the department pays interest on this refund. Typically, interest on advance tax refund is paid at a rate of 0.5% per month or part of a month from the 1st of April of the assessment year to the date on which the refund is granted, if the refund amount is 10% or more of the assessed tax. You can always check your income tax refund status through the portal.


Using TaxBuddy's Advance Tax Calculator

Calculating advance tax can sometimes feel complex, but using an advance tax calculator online can simplify it. TaxBuddy offers an Advance Tax Calculator designed to help you estimate your liability with ease. This tool helps you calculate advance tax easily by taking into account your estimated income, eligible deductions, and the applicable tax regime (Old or New). It can also help you figure out the amount due for each installment. Using TaxBuddy's advance tax calculator ensures greater accuracy in your estimations, helping you stay compliant and avoid overpayment or underpayment.


Conclusion: Stay Compliant and Stress-Free with Timely Advance Tax Payments

Ensuring advance tax compliance by paying advance tax on time is a fundamental aspect of managing your financial responsibilities. It not only helps you avoid tax penalties and interest charges but also contributes to better personal financial management by spreading out the tax burden. Meeting your advance tax obligations demonstrates fiscal discipline and supports the nation's development. We hope this guide has clarified the intricacies of advance tax for FY 2024-25 and FY 2025-26. For personalized advice or assistance with your tax matters, feel free to Contact TaxBuddy for expert assistance.


FAQ

Q1. Can I pay advance tax after the due date?

Yes, you can pay advance tax after the due date, but interest under Section 234C (for deferment of installments) and potentially Section 234B (if total payment is less than 90% by year-end) will be applicable.


Q2. What if I pay more advance tax than my liability?

If you pay more advance tax than your actual tax liability, you will receive a refund for the excess amount. You may also get interest on this refund from the Income Tax Department under Section 244A.


Q3. Do salaried employees need to pay advance tax?

Yes, salaried employees need to pay advance tax if they have other income (like rent, interest, capital gains) not fully covered by their employer's TDS, and their total tax liability after TDS is ₹10,000 or more.


Q4. Is advance tax applicable on capital gains?

Yes, advance tax is applicable on capital gains. You should estimate your capital gains and pay the tax on it in the remaining installments of the financial year. If gains arise after an installment due date, pay in the next one.


Q5. How is advance tax different from self-assessment tax?

Advance tax is paid during the financial year based on estimated income. Self-Assessment Tax is the tax paid before filing your income tax return if, after accounting for TDS and advance tax, there is still a tax amount due.


Q6. Can I revise my advance tax payment if my income estimate changes?

Yes, if your income estimate changes during the year, you can revise your advance tax liability and adjust the payment amount in the subsequent installments.


Q7. What happens if I don't pay advance tax at all?

If you don't pay advance tax when liable, you will have to pay interest under Section 234B (for non-payment of at least 90% of assessed tax) and Section 234C (for non-payment of installments).


Q8. Is there any relief for small taxpayers regarding advance tax? Yes, the primary relief is the threshold. Advance tax is only applicable if your estimated tax liability for the year is ₹10,000 or more.


Q9. Do NRIs have to pay advance tax in India?

Yes, NRIs must pay advance tax in India on income earned or accrued in India if their tax liability on such income is ₹10,000 or more.


Q10. Can I claim deductions like 80C while calculating advance tax?

Yes, you can claim eligible deductions (like those under Section 80C, 80D, etc.) while estimating your net taxable income for advance tax calculation.


Q11. Which challan is used for advance tax payment?

While historically Challan 280 was the form, the new income tax portal integrates this. You need to select 'Advance Tax' (payment code 100) during the e-payment process.


Q12. How to check my advance tax payment status?

You can check your advance tax payment status through your Form 26AS, which reflects taxes credited to your PAN. You can also view payment history on the income tax e-filing portal after logging in.


Q13. What if I make a mistake in Challan 280 (e.g., wrong AY)?

If you make a mistake like quoting the wrong Assessment Year (AY) while making the payment, there is a procedure for challan correction. You may need to contact your assessing officer or the bank. It's best to be very careful when filling in details.


Q14. Does advance tax apply to dividend income?

Yes, dividend income is part of your total income. If, after any applicable TDS on dividends, your total tax liability (including tax on dividends) exceeds ₹10,000, advance tax provisions will apply.


Q15. If my employer deducts TDS, do I still need to worry about advance tax?

You only need to worry about advance tax if you have significant other income (like interest, rent, capital gains, freelance income) where TDS is not deducted or is insufficient, and this additional income makes your total tax liability (after all TDS) ₹10,000 or more.


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