Advance Tax

Advance tax is income tax paid in instalments during the financial year — the "pay-as-you-earn" principle — rather than all at year-end. It is generally required if your tax liability after TDS is ₹10,000 or more.

What it is

Rather than waiting until you prepare your return, the law expects you to pay tax as you earn it through the year. If your estimated tax liability for the year — after subtracting TDS already deducted — is ₹10,000 or more, you generally have to pay advance tax. The quarterly instalment due dates are 15 June, 15 September, 15 December and 15 March, with a rising cumulative share due by each date.

Why it matters

Paying advance tax on time keeps you clear of interest charges. A shortfall or delay attracts interest under sections 234B and 234C, which is added to what you owe. Advance tax you pay is credited and reduces the balance you settle later as self-assessment tax; if your combined prepayments exceed your final liability, the excess comes back as a refund. You can confirm credited amounts in your Form 26AS.

Example Illustrative

Suppose your estimated tax for the year is ₹60,000 and TDS covers ₹35,000. Your net liability of ₹25,000 is above ₹10,000, so advance tax applies. You would spread the ₹25,000 across the 15 June, 15 September, 15 December and 15 March instalments. Missing an instalment could trigger 234C interest on the shortfall. Figures are illustrative only.