Who must pay advance tax
Advance tax is income tax paid in installments during the financial year itself, rather than as one lump sum after the year ends. Under Section 208, any taxpayer — salaried, self-employed, freelancer, or investor — whose estimated tax liability for the year, after subtracting all TDS, is ₹10,000 or more must pay advance tax. Most salaried employees never need to think about it because their employer's TDS already covers their entire liability. It becomes relevant the moment you have income tax doesn't fully capture: capital gains from stocks or mutual funds, freelance or consulting fees, rental income, interest on fixed deposits above the TDS threshold, or a large bonus/windfall.
The four due dates
For individuals (other than those using presumptive taxation), advance tax is due in four installments, each requiring a cumulative percentage of your total estimated tax liability to be paid by that date:
| Due date | Cumulative tax to be paid |
|---|---|
| Jun 15 | 15% |
| Sep 15 | 45% |
| Dec 15 | 75% |
| Mar 15 | 100% |
Presumptive taxpayers under Section 44AD (business) or 44ADA (specified professions) get a simpler rule: they can pay their entire advance tax liability in a single installment by 15 March, with no earlier due dates to track.
What happens if you miss a due date
Missing an installment, or paying less than the required cumulative percentage, triggers interest under Section 234C — roughly 1% per month (simple interest) on the shortfall for each installment you underpaid, for a short defined period. If your total advance tax paid across the year falls short of 90% of your final assessed tax, Section 234B interest also kicks in on the balance, running from April of the assessment year until you pay it. Use our Section 234 interest calculator to work out exactly how much interest applies if you've already missed a date or expect to underpay.
Capital gains and other windfall income
A common question: if you sell shares or property in, say, December, do you owe interest for not having paid advance tax on that gain back in June or September? No — the law recognizes you couldn't have predicted income you hadn't yet earned. For capital gains, lottery winnings, or any other income that arises unexpectedly during the year, you're required to pay the tax on it only in the remaining installments after the income actually arises — not retroactively for installments that had already passed. If a large gain arises in November, add the resulting tax to your December and March installments; no 234C interest applies for the June/September installments you couldn't have known about.
Because estimates rarely match reality perfectly, revisit your projected income at each installment date and adjust the next payment up or down — there's no penalty for revising your estimate as the year progresses, only for underpaying against your final actual liability.