Advance tax: who pays, due dates and interest
Advance tax is income tax paid during the year in instalments if liability is ₹10,000 or more. Companies pay 15%, 45%, 75% and 100% by June to March.
Short answer
Advance tax is income tax paid in instalments during the tax year itself, instead of in one lump sum after the year ends. Any taxpayer whose estimated tax liability, after TDS and TCS, is ₹10,000 or more must pay it by the due dates.
- Threshold
- Estimated tax liability of ₹10,000 or more
- Instalments
- 15% by 15 June, 45% by 15 September, 75% by 15 December, 100% by 15 March
- Presumptive taxpayers
- Single instalment by 15 March
- Interest
- For default and deferment (sections 424 and 425)
How advance tax works
The taxpayer estimates income for the tax year, computes tax at the applicable rates, deducts expected TDS and TCS, and pays the balance in instalments. Cumulative payments must reach 15% by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March. Taxpayers under the presumptive scheme for small businesses and professionals can pay the whole amount by 15 March. Resident senior citizens without business or professional income are not required to pay advance tax.
Interest for short payment
If advance tax paid is less than 90% of the assessed tax, interest is charged for the default, and separate interest is charged for deferment of individual instalments. Under the Income-tax Act, 2025, these are in sections 424 and 425, which replaced sections 234B and 234C. Interest is calculated at 1% per month or part of a month on the shortfall, so even small delays add up. Capital gains or unexpected income arising later in the year can be covered in the remaining instalments without interest for earlier instalments, as allowed by the rules.
Why it matters for startups
Loss-making startups usually have no advance tax, but once a company turns profitable, it must estimate profits each quarter. Founders receiving consulting income, rent or capital gains also need to pay advance tax personally. Build quarterly tax estimates into your finance calendar so cash is available on the due dates.
Related services
Sources
Written by the Refogo Editorial Team from the official sources above and checked on 2026-10-31. Laws, rates and due dates change, and authorities often extend deadlines, so confirm your own case with a qualified professional. This is general information, not legal or tax advice. Read our editorial policy or report an error to support@refogo.com.
Common questions
Do salaried employees need to pay advance tax?
Usually not, because the employer deducts TDS. But if they have other income such as rent, interest or capital gains, they may need to.
What if I overpay advance tax?
The excess is refunded with interest after the return is processed.
Is advance tax payable if the company has a loss?
No. If there is no estimated tax liability, no advance tax is payable.