The third installment of Advance Tax is due on December 15, 2025.
Taxpayers who miss this deadline may have to pay penalties and interest.
Advance Tax allows individuals and businesses to pay taxes in quarterly installments, instead of paying a lump sum at the end of the financial year.
This system is often called the “Pay as You Earn” scheme, as taxpayers pay tax as they earn income.
By December 15, taxpayers should have paid at least 75% of their estimated tax liability for the year.
Who Needs to Pay Advance Tax?
Advance tax is applicable for anyone whose estimated tax liability for the year is Rs 10,000 or more after adjusting for TDS.
Salaried individuals usually pay tax through monthly TDS, so advance tax is required only if TDS is insufficient.
Freelancers, investors, and small business owners are especially affected, as their income may not have TDS deducted regularly.
Senior citizens (aged 60 and above) with no business or professional income are not required to pay advance tax.
Advance tax applies to all types of income, including business, profession, capital gains, and rental income.
What Happens If You Miss the Deadline?
Missing the December 15 deadline can lead to interest penalties under the Income Tax Act:
Section 234B: Interest for default in payment of advance tax
Section 234C: Interest for deferment or shortfall in installment payments
Even if you pay the remaining tax later while filing your return, interest will still apply.
Delays can also result in a large lump-sum payment at the time of filing your tax return.
How to Pay Advance Tax
Advance tax can be paid online through the government portal or offline at authorized banks using Challan No. ITNS 280.
Companies and individuals whose accounts need auditing under Section 44AB must pay online.
Taxpayers under the presumptive tax scheme (Section 44AD/44ADA) can pay 100% of advance tax in a single installment by March 15 of the previous year.
Paying advance tax on time helps avoid penalties and reduces the stress of a large payment at the year-end.
