Advance Tax Payment: Who Should Pay and How?

Advance tax is also known as the “pay-as-you-earn” scheme. Instead of paying all your taxes at the end of the year, you are required to estimate and pay your taxes in advance during the financial year itself if your liability crosses a certain threshold.

This blog explains in simple terms who needs to pay advance tax for Financial Year 2024–25 (Assessment Year 2025–26) and how you can pay it online.

Legal Reference

• Income Tax Act, 1961
• Section 208: Requires advance tax payment if the estimated tax liability exceeds ₹10,000 in a financial year.
• Section 210: Manner of computation of advance tax.

Who Needs to Pay Advance Tax?

You must pay advance tax if:

• Your total tax liability (after considering TDS) exceeds ₹10,000 in a financial year.
• You are a salaried employee with significant income from other sources (rent, interest, capital gains).
• You are a freelancer, consultant, or business owner without regular TDS.
• You earn income from stock trading, cryptocurrency, property sales, etc.

Senior citizens (age 60 years and above) who do not have income from business or profession are exempt from paying advance tax.

Due Dates for Advance Tax Payment for FY 2024–25

For presumptive income taxpayers (Section 44AD/44ADA):

• Pay the entire advance tax in one installment by 15th March 2025.

Step-by-Step Guide to Pay Advance Tax Online

Step 1: Visit https://eportal.incometax.gov.in

• Click on “e-Pay Tax” option on the homepage.

Step 2: Log in with your PAN and password.

• You can also pay without login via “Quick Links.”

Step 3: Select “Income Tax” as the payment type.

• Choose Assessment Year 2025–26.

Step 4: Fill Challan 280

• Type of Payment: Advance Tax (100)
• Major Head: 0021 – Income Tax (Other than Companies)

Step 5: Make Payment

• Choose payment mode (Net Banking, Debit Card, UPI, NEFT/RTGS).
• Save the Challan Receipt and Challan Identification Number (CIN).

Example of Advance Tax Payment

Ms. Priya expects her total tax liability for FY 2024–25 to be ₹1,20,000.

• On or before 15th June 2024: Pay ₹18,000 (15% of ₹1,20,000)
• On or before 15th September 2024: Pay ₹36,000 more (30% additional to make cumulative 45%)
• On or before 15th December 2024: Pay ₹36,000 more (30% additional to make cumulative 75%)
• On or before 15th March 2025: Pay ₹30,000 balance.

She must follow these installments to avoid interest under Sections 234B and 234C.

Important Points to Remember

• Missing advance tax payments can lead to interest penalties.
• Always estimate your income carefully based on past trends and future projections.
• Self-employed individuals and freelancers must pay in four installments unless presumptive tax applies.
• Use Form 26AS and AIS to estimate TDS already deducted before calculating advance tax.

Conclusion

Advance tax payment is mandatory if your net tax liability crosses ₹10,000 in a year. Paying it timely saves you from paying high interest later and helps you manage your finances better. Always plan your cash flows in advance to meet installment deadlines.

Reach out Today!

Need help estimating your advance tax or filing your tax payments correctly?

Schedule a meeting with our Chartered Accountant, Anshul Goyal, by visiting:

Disclaimer: I am Anshul Goyal, a Chartered Accountant licensed with ICAI, India. This blog is for educational purposes only and does not replace personalized professional advice.

Frequently Asked Questions

1. Is advance tax applicable only to businesses?
No. Salaried individuals with additional income must also pay if liability exceeds ₹10,000.

2. How to correct a wrong advance tax payment?
You can request a correction through your bank or CPC once payment is made.

3. Is there any penalty for non-payment of advance tax?
Yes, interest under Sections 234B and 234C will apply.

4. Can I pay advance tax after the due date?
Yes, but late payment will attract interest charges.

5. How to track advance tax paid?
Check your Form 26AS for advance tax credits.