The deadline to pay the final advance tax installment for the financial year 2025–26 is March 15, 2025.
Taxpayers who are required to pay advance tax should complete the payment before this date to avoid penalties.
Advance tax is part of the “pay as you earn” system
Instead of paying the entire tax amount at the end of the year, taxpayers pay it in multiple installments during the financial year.
The rule mainly applies to income that is not covered by salary, such as business earnings, rent, or capital gains.
What Is Advance Tax?
Advance tax is the income tax that must be paid in advance during the year when the income is earned.
It usually applies to income sources like:
Business or professional income
Rental income
Capital gains from property or stocks
Freelancing income
Under the Income Tax Act, 1961, taxpayers with a tax liability of ₹10,000 or more in a financial year must pay advance tax after adjusting TDS (Tax Deducted at Source).
Because the tax is paid in stages, advance tax is often called the “earn and pay” tax system.
Advance Tax Installment Dates
Advance tax must be paid in four installments during the financial year.
June 15: 15% of total tax liability
September 15: 45% of total tax (including the first installment)
December 15: 75% of total tax
March 15: 100% of total tax liability
The March 15 payment is the final installment that completes the total advance tax payment for the year.
Who Needs to Pay Advance Tax?
Advance tax is mandatory for taxpayers whose estimated tax liability exceeds ₹10,000 in a year.
This includes people with income from:
Business or professional services
Freelancing work
Rental property
Capital gains from investments
Professionals such as doctors, lawyers, and consultants often need to pay advance tax because their income may not have full TDS deductions.
Employees whose tax is fully deducted through TDS may not need to pay advance tax.
However, if they earn additional income from investments, rent, or side businesses, advance tax may still apply.
Who Is Exempt from Advance Tax?
Some taxpayers are exempt from paying advance tax.
A resident senior citizen aged 60 years or above does not need to pay advance tax if they do not have income from business or profession.
In such cases, their tax can be paid while filing the income tax return.
Penalty for Missing Advance Tax Payment
If advance tax is not paid on time, the Income Tax Department of India may charge interest as a penalty.
Under the Income Tax Act, 1961, interest is charged under two sections:
Section 234B: Applies when advance tax is not paid or paid less than required.
Section 234C: Applies when individual installments are missed or paid late.
In both cases, a 1% interest per month is charged on the outstanding amount.
Advance tax can be paid online or offline, and making payments on time can help taxpayers avoid additional charges and penalties.
