Advance Tax Calculator (FY 2025-26)

Advance Tax Calculator: Pay Your Tax As You Earn

Advance tax is income tax you pay during the financial year in which the income is earned, instead of in a single lump sum after the year ends. The Income Tax Act calls this the "pay as you earn" scheme. This calculator helps salaried people with side income, freelancers, consultants, professionals, business owners, traders and investors work out how much to deposit at each due date so they avoid interest under Sections 234B and 234C.

Who must pay advance tax

You are liable to pay advance tax if your total tax liability for the year, after subtracting TDS and TCS already deducted or collected, is Rs. 10,000 or more. This threshold is set by Section 208 and has stayed at Rs. 10,000 (as of FY 2025-26; verify against the latest Finance Act, as thresholds and rates can change).

• Salaried employees whose employer deducts full TDS usually need not pay advance tax on salary, but they must pay it on extra income such as interest, rent, capital gains, dividends or freelance fees where enough tax is not deducted at source.
• A resident senior citizen (age 60 or above) who has no income from business or profession is exempt from advance tax under Section 207(2).
• Taxpayers under the presumptive schemes (Section 44AD for business, Section 44ADA for professionals) pay their entire advance tax in a single installment by 15 March.

The formula in words

Advance tax liability = estimated total tax on the year's income (applying the correct slab or special rates, plus surcharge and 4% health and education cess) minus TDS and TCS minus any rebate or relief. If this net figure is Rs. 10,000 or more, it is paid in installments as a running cumulative percentage:

• On or before 15 June: 15% of the liability
• On or before 15 September: 45% cumulative, less what you have already paid
• On or before 15 December: 75% cumulative, less amount paid
• On or before 15 March: 100% cumulative, less amount paid

A fully worked example

Rahul is a freelance IT consultant for FY 2025-26. His estimated tax on total income comes to Rs. 1,50,000, and his clients have deducted TDS of Rs. 30,000. His advance tax liability is Rs. 1,50,000 minus Rs. 30,000 = Rs. 1,20,000, which is well above Rs. 10,000, so he must pay. His schedule is:

• By 15 June: 15% of Rs. 1,20,000 = Rs. 18,000
• By 15 September: 45% = Rs. 54,000 cumulative, so a further Rs. 36,000
• By 15 December: 75% = Rs. 90,000 cumulative, a further Rs. 36,000
• By 15 March: 100% = Rs. 1,20,000 cumulative, a final Rs. 30,000

Now suppose Rahul forgets and pays nothing until 15 March, when he deposits the full Rs. 1,20,000. His year-end total is correct, but he deferred the earlier installments, so Section 234C interest applies at 1% per month (simple interest) on each shortfall, computed on the tax due on his returned income:

• 15 June shortfall Rs. 18,000 x 1% x 3 months = Rs. 540
• 15 September shortfall Rs. 54,000 x 1% x 3 months = Rs. 1,620
• 15 December shortfall Rs. 90,000 x 1% x 3 months = Rs. 2,700
• 15 March shortfall is nil, because he paid 100% on that day

Total 234C interest = Rs. 4,860. Because he did pay the full Rs. 1,20,000 by 31 March (100%, which is at least 90% of the assessed tax), no Section 234B interest arises here. The Rs. 4,860 is simply the price of deferring installments even though the year-end total was correct.

Section 234B versus 234C

Section 234C penalises late or short installments during the year, as shown above. There is a grace band for the first two installments: no 234C interest on the June installment if you have paid at least 12% of the liability by 15 June, and none on the September installment if you have paid at least 36% by 15 September. For the December and March installments you must reach 75% and 100% respectively.

Section 234B applies when your total advance tax paid by 31 March is less than 90% of the finally assessed tax. Interest runs at 1% per month (simple) on the shortfall from 1 April of the assessment year until you pay, so it keeps accruing until the return is filed and dues are cleared.

Tax treatment

Advance tax is not an expense or deduction. It is simply a credit against your final tax bill, adjusted when you file your ITR. If you overpay, the excess is refunded, often with interest under Section 244A. Interest paid under Sections 234B and 234C is not a business expense and is not deductible.

Common mistakes

• Forgetting capital gains, dividend or interest income when estimating. 234C relief is available on such unforeseeable income only if you pay the tax on it in the remaining installments (or by 31 March for income arising after 15 March).
• Assuming salary TDS covers everything and ignoring moonlighting, rental or investment income.
• Paying the full amount only on 15 March and still incurring 234C on the earlier installments.
• Using the wrong challan. Advance tax is deposited under minor head 100 (Advance Tax) using Challan ITNS 280 on the Income Tax portal.
• Not rounding each installment shortfall down to the nearest Rs. 100 before charging interest, as the computation rules require.

Frequently asked questions

When is advance tax not required to be paid?

You need not pay advance tax if your total tax liability after TDS and TCS is below Rs. 10,000 in the financial year. A resident senior citizen aged 60 or above who has no income from business or profession is also exempt under Section 207(2).

What are the four advance tax due dates and percentages?

For most taxpayers: 15% by 15 June, 45% cumulative by 15 September, 75% cumulative by 15 December and 100% by 15 March. Taxpayers under the presumptive schemes (Section 44AD or 44ADA) pay 100% in a single installment by 15 March.

How is Section 234C interest calculated?

It is 1% per month simple interest on the shortfall of each installment, charged for 3 months each for the June, September and December installments and for 1 month for the March installment. The shortfall is computed on the tax due on returned income and rounded down to the nearest Rs. 100.

How does Section 234B differ from 234C?

Section 234C penalises deferment of individual installments during the year, while 234B applies when total advance tax paid by 31 March is less than 90% of the assessed tax. 234B interest runs at 1% per month from 1 April of the assessment year until the tax is paid.

Do salaried employees need to pay advance tax?

Not on salary, since the employer deducts TDS on it. But if you have other income such as interest, rent, capital gains, dividends or freelance fees on which insufficient tax is deducted, and your net liability crosses Rs. 10,000, you must pay advance tax on that income.

How do I pay advance tax and under which head?

Pay online through the Income Tax e-filing portal or an authorised bank using Challan ITNS 280, selecting minor head 100 (Advance Tax). Keep the challan receipt so you can claim the credit while filing your ITR.