Advance Tax Due Dates
Advance tax is income tax paid in instalments during the financial year based on estimated income, with four prescribed due dates: 15 June (15%), 15 September (45%), 15 December (75%), and 15 March (100%) of the estimated annual tax liability.
The advance tax mechanism under Sections 207 to 219 of the Income Tax Act, 1961 requires taxpayers with an estimated tax liability of Rs 10,000 or more in a financial year to pay tax in advance rather than waiting for the year-end. This ensures steady tax revenue flow to the government and prevents large year-end collections.
The four instalment schedule is specified under Section 211. By 15 June, at least 15% of the advance tax must have been paid. By 15 September, the cumulative payment must reach 45%. By 15 December, cumulative payment must reach 75%. The final instalment by 15 March must bring total advance tax payment to 100% of the estimated liability for the year.
For taxpayers opting for the presumptive taxation scheme under Sections 44AD (business income) and 44ADA (professionals), a single advance tax instalment of the entire estimated liability is due by 15 March, simplifying compliance. Senior citizens (aged 60 years or above) who do not have income from business or profession are exempt from advance tax requirements entirely.
If advance tax is not paid by the due dates or is paid in amounts less than specified percentages, interest under Section 234C is charged at 1% per month (simple interest) for each shortfall period. Section 234B charges interest at 1% per month where total advance tax paid falls short of 90% of the assessed tax.
For companies, the four-instalment schedule is identical. Dividend income received after 31 March of a financial year (i.e., declared and paid in the new year) may be excluded from advance tax computation for the previous financial year, avoiding 234C interest.
Taxpayers with significant capital gains, large dividend receipts, or irregular income (such as windfall profits from options trading) need to carefully estimate their liability at each quarter-end to minimise interest exposure. The computation of advance tax is an iterative process, as income may continue to accrue through the financial year.