Today marks the third instalment deadline for advance tax payments in FY 2025–26 (Assessment Year 2026–27). Taxpayers must ensure at least 75% of their
estimated total tax liability (after TDS) is paid by this date to avoid interest charges. Missing or short-paying this instalment triggers automatic interest under the Income Tax Act, with no separate penalty notice required. What is Advance Tax? Advance tax operates under the “Pay as You Earn” scheme, requiring taxpayers to pay tax in instalments during the year based on estimated income, instead of paying a lump sum at the time of filing returns. This applies if your total tax liability exceeds Rs 10,000 after deducting TDS. Who Must Pay?
- Salaried individuals with additional income (rent, capital gains, interest, etc.)
- Freelancers, professionals, and business owners
- Anyone with tax liability above Rs 10,000 post-TDS
Exemptions:
- Senior citizens (60+) with no business or professional income
- Presumptive taxation scheme taxpayers (Sections 44AD/44ADA), who can pay the full amount by March 15
Instalment Schedule for FY 2025–26
- June 15, 2025: 15% of total advance tax
- September 15, 2025: 45% (after adjusting earlier payments)
- December 15, 2025: 75% (after adjusting earlier payments)
- March 15, 2026: 100% (after adjusting earlier payments)
Any payment made by March 31, 2026, is treated as advance tax.
Penalties: Interest, Not Flat Fines
There is no one-time penalty. Instead, interest is charged at 1% per month (or part thereof) on the shortfall:
- Section 234C:
Applicable for delayed or deferred instalments.
If less than 75% is paid by December 15, interest is charged at 1% per month for three months on the shortfall. - Section 234B:
If less than 90% of the total tax liability is paid by March 31, 2026, interest is charged at 1% per month from April 1, 2026, until payment or assessment.
How to Pay Today
Online:
- Income Tax e-Filing Portal → e-Pay Tax → Challan ITNS 280 → Select “(100) Advance Tax”
Offline:
- Download Challan ITNS 280, fill in the details, and pay at an authorized bank branch
Act before midnight to avoid interest. While the rate is simple, it can add up over time. For precise calculations, consult a tax professional.
