Paying taxes on time is an important responsibility for every taxpayer. To reduce the burden of paying a large amount of tax at the end of the year, the Income Tax Department introduced the Advance Tax system, also known as the “pay-as-you-earn” system.
Under this system, taxpayers pay their income tax in installments during the financial year based on their estimated income. This ensures that taxes are paid regularly and helps taxpayers avoid large tax payments at the time of filing their Income Tax Return (ITR).
For the Financial Year 2025–26 (Assessment Year 2026–27), the last installment of advance tax is due on 15 March 2026.
What is Advance Tax?Advance tax is the income tax that must be paid in advance during the financial year instead of paying the entire amount at the end of the year. It is calculated based on the estimated income earned during the year.
The advance tax system allows taxpayers to divide their tax liability into multiple installments, which makes tax payment easier and helps avoid financial stress at the end of the year.
Who is Required to Pay Advance Tax?Advance tax becomes applicable when the estimated total tax liability during a financial year is ₹10,000 or more after adjusting TDS or TCS.
Several categories of taxpayers are required to pay advance tax.
Salaried individuals may also need to pay advance tax if they have additional income apart from salary. This may include income from rent, bank interest, capital gains, or freelance work.
Freelancers and professionals such as consultants, doctors, lawyers, designers, and other independent service providers are also required to estimate their annual income and pay advance tax accordingly.
Business owners who earn profits during the financial year must also pay advance tax based on their expected income.
Investors earning income through capital gains, dividends, or other investments may also fall under the advance tax requirement if their tax liability crosses the prescribed threshold.
Exemption from Advance TaxCertain taxpayers are exempt from paying advance tax.
Resident senior citizens who are 60 years of age or older and do not have income from business or profession are not required to pay advance tax.
However, if they have tax liability, they must pay it while filing their income tax return.
Advance Tax Due Dates for FY 2025–26Advance tax is required to be paid in four installments during the financial year.
The first installment is due on 15 June 2025, where taxpayers must pay at least 15% of their total estimated tax liability.
The second installment is due on 15 September 2025, and by this time the taxpayer should have paid 45% of the total tax liability.
The third installment is due on 15 December 2025, and the total tax paid by then should reach 75% of the estimated tax liability.
The final installment is due on 15 March 2026, when the taxpayer must ensure that 100% of the advance tax liability has been paid.
Advance Tax under Presumptive TaxationTaxpayers who opt for presumptive taxation schemes under Section 44AD or Section 44ADA have a simplified advance tax requirement.
Instead of paying taxes in four installments, they are required to pay the entire advance tax amount in a single installment on or before 15 March of the financial year.
This simplifies compliance for small businesses and professionals.
How to Pay Advance Tax OnlineAdvance tax can be paid easily through the Income Tax e-Filing Portal.
First, visit the official Income Tax e-Filing website and go to the “e-Pay Tax” option available under Quick Links.
After that, enter your PAN number and mobile number, and verify your identity using the OTP received on your phone.
Next, select the Assessment Year 2026–27 and choose Advance Tax (100) as the type of payment.
Enter the amount of advance tax that needs to be paid and choose your preferred payment mode such as Net Banking, Debit Card, Credit Card, or UPI.
Once the payment is completed successfully, you should download the challan receipt (CRN) for your records. This challan contains important details such as the BSR code and challan serial number, which are required while filing the Income Tax Return.
Penalties for Non-Payment of Advance TaxIf advance tax is not paid on time or if the required installments are not paid correctly, interest penalties may apply.
Under Section 234C, interest of 1% per month is charged if the taxpayer fails to pay the required advance tax installment by the specified due date.
Under Section 234B, interest of 1% per month is charged if the taxpayer fails to pay at least 90% of the total tax liability by 31 March of the financial year.
These penalties can increase the total tax burden, which is why it is important to estimate and pay advance tax correctly.
Benefits of Paying Advance Tax on TimePaying advance tax on time provides several advantages.
It helps taxpayers avoid interest penalties and legal complications. It also reduces the financial burden of paying a large amount of tax at once.
Timely payment of advance tax also improves financial discipline and better tax planning. In addition, it ensures smooth filing of the Income Tax Return at the end of the financial year.
How JS Financial Services Can HelpCalculating advance tax accurately can be difficult, especially if you have multiple sources of income, business profits, or capital gains.
JS Financial Services provides professional support for advance tax planning and filing. Our team helps taxpayers estimate their income correctly and calculate the exact advance tax liability.
We also assist with advance tax payment, tax planning, and Income Tax Return filing for individuals, professionals, and businesses.
With expert guidance, you can avoid penalties, stay compliant with tax regulations, and manage your taxes efficiently.
Contact JS Financial ServicesIf you need assistance with advance tax calculation or filing, feel free to contact us.
JS Financial Services
Phone: +91 73400 02251
Website: www.jsfinancials.in
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