Most salaried people never think about advance tax because their employer's TDS handles it. The rule catches you the moment you have income your employer does not know about, which in practice means freelancing, capital gains, rent, or large interest income.
The four dates
| Due by | Cumulative % of your year's tax | Who this usually catches |
|---|---|---|
| 15 June | 15% | Freelancers, consultants |
| 15 September | 45% | Anyone who sold shares or funds in Q1 or Q2 |
| 15 December | 75% | Landlords, people with large FD interest |
| 15 March | 100% | Everyone who owes it |
What it costs to miss
- Section 234C: 1 percent a month on the shortfall for each instalment you underpaid.
- Section 234B: 1 percent a month from April of the assessment year until you pay, if you have paid less than 90 percent of your total liability by 31 March.
- These stack. On a ₹2 lakh shortfall carried for six months, that is roughly ₹12,000 of interest for nothing.
Payment is straightforward: the e-Pay Tax section of the income tax portal, challan 280, minor head Advance Tax. Keep the challan number, since you will need it when filing. If you overpay, it is refunded when you file, so erring slightly high is cheaper than erring low. Our old versus new regime guide will tell you which slab to estimate against.
Frequently asked
Anyone whose total tax liability for the financial year exceeds ₹10,000 after accounting for TDS. In practice that means freelancers and consultants, people with significant capital gains, rental income or interest income, and business owners. Resident senior citizens aged 60 and above with no business or professional income are exempt.
What to do next
- Estimate your full-year tax now if you have any income outside salary.
- Diarise 15 June, 15 September, 15 December and 15 March.
- If you sell shares, remember the tax lands in the very next instalment.
