Advance Tax — Who Must Pay, Due Dates and Calculation for FY 2025-26

Advance tax is a requirement for business owners, self-employed professionals, landlords and anyone with income that is not fully covered by TDS (Tax Deducted at Source). If you don't pay advance tax on time, you pay interest of 1% per month on the shortfall. Here is everything you need to know about advance tax for FY 2025-26.

Who Must Pay Advance Tax?

Any individual, business or company with a tax liability of ₹10,000 or more after TDS deductions for the year must pay advance tax. This includes:

• Self-employed professionals and consultants
• Business owners (proprietorships, partners in firms)
• Freelancers with income from Indian and foreign clients
• Directors and shareholders of companies receiving dividends or capital gains
• Landlords with rental income exceeding their TDS credits

Senior citizens (75+) with only pension and interest income (no business income) are exempt from advance tax.

Advance Tax Due Dates for FY 2025-26

• 15 June 2025: 15% of estimated annual tax liability
• 15 September 2025: 45% of estimated annual tax (cumulative)
• 15 December 2025: 75% of estimated annual tax (cumulative)
• 15 March 2026: 100% of estimated annual tax (cumulative)

For assessees under presumptive taxation (Section 44AD/44ADA), advance tax can be paid in a single instalment by 15 March instead of four instalments.

How to Calculate Advance Tax

Step 1: Estimate your total income for the year — business profit, professional income, rent, dividends, capital gains, etc.

Step 2: Apply the applicable tax rates (based on your chosen regime — old or new).

Step 3: Subtract expected TDS deductions from clients, banks and other deductors.

Step 4: The balance is your advance tax liability. Pay 15%, 45%, 75% and 100% by each respective due date.

Advance tax is paid via the Income Tax portal (incometax.gov.in) through Challan 280.

Interest Penalty for Non-Payment

Section 234B: If you pay less than 90% of the total tax liability by 31 March, interest at 1% per month (or part of month) is levied from 1 April to the date of actual payment.

Section 234C: If you miss or underpay any instalment, interest at 1% per month is levied for 3 months (except for the last instalment).

Both interests run simultaneously and can add up to a significant amount if payments are delayed for the full year.

Conclusion

Advance tax planning prevents last-minute surprises and avoids unnecessary interest costs. SPOTON's CA team computes advance tax estimates for business clients and ensures timely payment across all four instalments. Contact us for comprehensive income tax planning services in Kerala.