As the financial year 2025-26 unfolds, the Income Tax Department has issued a timely reminder: the first instalment of advance tax is due by June 15, 2025. Taxpayers who are liable must ensure timely payment to avoid interest penalties and remain compliant with the Income Tax Act. But how do you know if you’re liable to pay advance tax? Let’s break it down.
What Is Advance Tax?
Advance tax, also known as “pay as you earn” tax, is the income tax paid in instalments instead of a lump sum at the end of the financial year. This system is applicable to individuals, businesses, and professionals whose tax liability for the year exceeds ₹10,000.
Who Needs to Pay Advance Tax?
You must pay advance tax if:
Your estimated total tax liability for the year is ₹10,000 or more after TDS (Tax Deducted at Source).
You are a salaried individual, freelancer, or professional with income from sources like interest, rent, capital gains, or business.
Even senior citizens (60 years and above) without business income are exempt from advance tax.
Due Dates for Advance Tax Payments (FY 2025-26)
Due Date Advance Tax Payable
June 15, 2025 At least 15% of total tax liability
September 15, 2025 Up to 45% of total tax liability
December 15, 2025 Up to 75% of total tax liability
March 15, 2026 100% of total tax liability
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How to Calculate Your Advance Tax
Estimate your total income for FY 2025-26.
Subtract exemptions and deductions (under sections like 80C, 80D, etc.).
Apply the applicable tax slab rates to calculate total tax liability.
Subtract TDS already deducted or expected to be deducted.
If the remaining tax liability exceeds ₹10,000, you must pay advance tax.
How to Pay Advance Tax
You can pay advance tax via:
The Income Tax Department’s website
Through authorised banks using Challan No. ITNS 280
Internet banking or UPI-enabled platforms
What If You Miss the Deadline?
If you fail to pay on time:
Interest under section 234B (for shortfall) and 234C (for deferment) will apply.
This can increase your total tax burden.
Conclusion
With the June 15 deadline fast approaching, it’s time for taxpayers to assess their liability and ensure compliance. Paying advance tax not only helps avoid penalties but also smooths out your annual tax burden. If you’re unsure about your liability, consult a tax professional or use the income tax department’s calculator tools for guidance.
Stay ahead, stay compliant!
