What is Advance Tax?
Advance Tax is the income tax paid in installments during the financial year instead of paying the entire amount at the end of the year. It is also known as "pay as you earn" tax. If your total tax liability exceeds Rs 10,000 in a financial year, you are required to pay advance tax.
This calculator helps you estimate your advance tax liability and provides a quarterly payment schedule to help you plan your tax payments effectively and avoid interest penalties.
Who Should Pay Advance Tax?
Advance tax is applicable to:
- Salaried Individuals: If tax liability after TDS exceeds Rs 10,000
- Freelancers & Consultants: Income without TDS deduction
- Business Owners: Professionals with estimated tax liability over Rs 10,000
- Investors: Capital gains, rental income, or interest income recipients
- Senior Citizens: Exempted if they don't have business/professional income
Advance Tax Due Dates FY 2024-25
| Due Date | Cumulative Tax | Installment |
|---|---|---|
| June 15, 2024 | 15% | 15% of total tax |
| September 15, 2024 | 45% | 30% of total tax |
| December 15, 2024 | 75% | 30% of total tax |
| March 15, 2025 | 100% | 25% of total tax |
Interest on Late Payment
If you fail to pay advance tax on time, you may be liable to pay interest:
- Section 234B: Interest at 1% per month if advance tax paid is less than 90% of assessed tax
- Section 234C: Interest at 1% per month for deferment of advance tax installments
How to Pay Advance Tax?
- Visit the Income Tax e-Filing portal or authorized bank
- Select Challan 280 for advance tax payment
- Fill in PAN, assessment year, and tax amount
- Choose payment mode (net banking/debit card)
- Save the challan receipt for your records
Advance Tax Calculation Example
Scenario: Annual Income Rs 15,00,000, TDS Deducted Rs 50,000
- Estimated Tax Liability: Rs 1,87,200 (New Regime)
- TDS Already Paid: Rs 50,000
- Advance Tax Payable: Rs 1,37,200
- Q1 (June 15): Rs 20,580 (15%)
- Q2 (Sep 15): Rs 41,160 (30%)
- Q3 (Dec 15): Rs 41,160 (30%)
- Q4 (Mar 15): Rs 34,300 (25%)
Frequently Asked Questions
What happens if I don't pay advance tax?
If you don't pay advance tax and your tax liability exceeds Rs 10,000, you will be charged interest under Section 234B (1% per month on unpaid tax) and Section 234C (1% per month for each quarter of deferment). This interest is calculated from the due date until the date of payment.
Can salaried employees avoid advance tax?
If your employer deducts sufficient TDS from your salary and your total tax liability after TDS is less than Rs 10,000, you don't need to pay advance tax. However, if you have additional income (rental, capital gains, etc.) that pushes your liability above Rs 10,000, advance tax becomes applicable.
Are senior citizens exempt from advance tax?
Yes, senior citizens (60 years or above) who do not have income from business or profession are exempt from paying advance tax. However, if they have business income, they must pay advance tax like other taxpayers.
Can I pay advance tax in a single installment?
Yes, you can pay the entire advance tax in a single installment. However, paying in quarterly installments as per due dates helps avoid interest under Section 234C. If you pay 100% before March 31, you avoid 234B interest but may still incur 234C interest for missed quarterly deadlines.
How do I claim credit for advance tax paid?
Advance tax paid is automatically reflected in your Form 26AS. When filing your Income Tax Return (ITR), you can claim credit for all advance tax payments made during the year. Ensure you keep challan receipts as proof of payment.
What if I overestimate my advance tax?
If you pay more advance tax than your actual liability, you can claim a refund when filing your ITR. The excess amount will be refunded to your bank account after processing, typically with interest at 6% per annum.