Indian taxpayers are heading into a crucial compliance window as the deadline for the third instalment of advance tax ends on Monday, 15 December 2025.
Anyone with pending advance tax liabilities must settle their dues by this date to avoid interest charges and penalties later. Advance tax is not optional for eligible taxpayers; it is a statutory requirement under the Income Tax Act, and delays can quickly add to your financial burden. Advance tax refers to the system of paying income tax in parts during the financial year instead of settling the entire amount at year-end. Covered under Sections 207 to 219 of the Income Tax Act, this mechanism spreads the tax obligation across installments, easing cash-flow pressure on taxpayers and ensuring steady revenue for the government. Instead of waiting until filing your Income Tax Return (ITR), taxpayers estimate their annual income and pay tax in scheduled portions. This applies across categories, salaried individuals, self-employed professionals, freelancers, businesses, and corporates. Advance Tax Instalment Schedule: You Must Track The Income Tax Department has laid out four checkpoints during the year for clearing advance tax liabilities: First installment: On or before 15 June 2025 – 15 per cent of total tax liability Second installment: On or before 15 September 2025 – 45 per cent of total tax liability, minus tax already paid Third installment: On or before 15 December 2025 – 75 per cent of total tax liability, minus earlier payments Final installment: On or before 15 December 2025 – 100 per cent of the remaining tax liability, after adjusting earlier payments Data from Cleartax indicates that no interest under Section 234C applies if taxpayers pay up to 12 per cent of their tax in the first instalment and up to 36 per cent by the second. Who Is Required To Pay Advance Tax? Any taxpayer whose estimated tax payable exceeds Rs 10,000 in a financial year must pay advance tax under Section 208. This rule applies to individuals, companies, and businesses alike. Senior citizens aged 60 or above are exempt, provided they do not earn income from a business or profession. If they do, advance tax rules apply to them as well. How To Make An Advance Tax Payment Step 1: Go to the official Income Tax Department portal. (Direct link: https://www.incometax.gov.in/iec/foportal/) Step 2: From the Quick Links section, choose the “E-pay” option. Step 3: Provide key details such as your PAN and registered mobile number, then click “Continue.” Step 4: Verify your identity by entering the OTP sent to your mobile number and selecting “Proceed.” Step 5: Choose “Income Tax” as the payment category and click “Continue.” Step 6: Fill in the required information, including your contact details, assessment year, email address, and bank name. Step 7: You will be redirected to the payment gateway to complete the transaction. What Happens If You Miss the Deadline? Failure to pay advance tax on time attracts 1 per cent monthly interest under Sections 234B and 234C. This interest accumulates quickly, making delays an expensive mistake. How To Estimate And Pay Your Advance Tax To calculate advance tax, taxpayers should assess past income trends, project current-year earnings, deduct eligible exemptions and deductions, and compute total tax liability under the applicable tax regime. The Income Tax Department’s online calculator can help streamline this process. Payment can be made through the Income Tax Department portal using the e-pay facility. Once payment is completed, a challan number is generated as proof of transaction.
