Advance tax is the tax you pay as you earn — instead of waiting for the end of the financial year. If your tax liability for the year exceeds ₹10,000, you are required to pay advance tax in four instalments.

This guide explains what advance tax is, how to calculate it, and includes an easy-to-understand Advance Tax Calculator based on the old and new regimes.

What is Advance Tax?

Advance tax, also known as “pay-as-you-earn” tax, is the income tax payable in instalments during the financial year, rather than at the end. It applies to salaried, freelancers, businesspersons, and capital gains earners — if their total tax liability after deductions exceeds ₹10,000.

Who Should Pay Advance Tax?

Advance tax is applicable to:

• Salaried individuals with other sources of income (interest, rent, capital gains)
• Self-employed professionals or freelancers
• Businesses (individuals or companies)
• NRIs with Indian income
• Traders and investors (including F&O and intraday)

However, senior citizens (60 years or above) not having business income are exempt from advance tax.

Advance Tax Payment Due Dates for FY 2024-25

• 15th June: 15% of total estimated tax liability
• 15th September: 45% of total tax (cumulative)
• 15th December: 75% of total tax (cumulative)
• 15th March: 100% of total tax liability

Advance Tax Calculator – Step-by-Step Guide

Our Advance Tax Calculator helps you calculate quarterly instalments based on:

• Total income (salary, business, interest, capital gains, etc.)
• Age category (below 60 / senior citizen / super senior citizen)
• Applicable deductions (80C, 80D, 80G, HRA, standard deduction)
• Old Regime vs New Regime
• Surcharge and health & education cess

Step 1: Enter Your Total Income

Include salary, freelance income, business profits, rental income, interest, or capital gains.

Step 2: Select the Tax Regime

Choose between:

• Old Regime: Higher tax slabs with deductions allowed
• New Regime: Lower tax rates but no major deductions

Step 3: Deduct Allowable Deductions

If using the Old Regime, deduct:

• Section 80C (up to ₹1.5 lakh)
• Section 80D (medical insurance)
• Section 80G (donations)
• HRA or home loan interest
• Standard deduction (₹50,000 for salaried)

Step 4: Compute Total Tax Liability

After deductions, apply the appropriate tax slabs for your regime. Add surcharge (if income exceeds ₹50 lakh or ₹1 crore) and health & education cess at 4%.

Step 5: Divide into Quarterly Instalments

Pay the tax in the following pattern:

• 15% by 15th June
• 30% more by 15th September (45% cumulative)
• 30% more by 15th December (75% cumulative)
• Final 25% by 15th March

Interest on Late or Short Payment

If you miss or underpay any advance tax instalment, interest is charged under:

• Section 234B: For not paying 90% of total tax by year-end
• Section 234C: For missing instalment-wise due dates

These interest charges can be avoided with timely calculation and payments using our advance tax calculator.

Benefits of Paying Advance Tax

• Helps avoid last-minute burden at year-end
• Prevents interest penalties under Sections 234B and 234C
• Improves cash flow planning
• Necessary for TDS-exempt income (capital gains, rental income)

Advance Tax Payment – How to Pay Online

• Visit the official Income Tax portal: https://www.incometax.gov.in
• Go to ‘e-Pay Tax’ section
• Select Challan 280 for individual taxpayers
• Choose ‘Advance Tax (100)’ under type of payment
• Pay using Net Banking, Debit Card, or UPI
• Download challan receipt for records

Conclusion

Advance tax is mandatory if your annual tax liability exceeds ₹10,000. Paying it on time in the correct instalments helps avoid penalties and interest. Use our free Advance Tax Calculator to compute your quarterly tax dues accurately for FY 2024-25 under both the old and new regimes.

Still confused or need help estimating your tax? Our experts at Quickcomply are just a click away to help you stay compliant and save more. Get in touch with us today!