Advance tax due dates and instalments: who must pay, how to compute and interest

You must pay advance tax if your total tax for FY 2026-27, after TDS and TCS, is ₹10,000 or more. It is paid in four instalments: 15% by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March, each measured cumulatively. Businesses on presumptive taxation under Section 44AD or 44ADA pay the full amount by 15 March. Miss or short-pay an instalment and interest runs at 1% a month under Sections 234B and 234C. This guide shows who pays, how to compute the amount from projected profit, how to pay online through Challan 280 and how to set up a quarterly routine.

Who must pay advance tax

Section 208 makes advance tax payable by every person whose tax liability for the year, computed on estimated income and reduced by TDS and TCS, is ₹10,000 or more. The word "person" covers a proprietor, a partnership firm, an LLP, a company, an HUF and a freelancer. There is no turnover test and no link to GST or audit.

The one exemption under Section 207(2) is a resident individual aged 60 or above who has no income from business or profession. A retired shopkeeper living on rent and interest is exempt; a 65-year-old still running the shop is not.

Salaried employees rarely pay advance tax because their employer's TDS under Section 192 covers it (see TDS on salary). Business owners are the opposite: customers deduct little or no TDS on what they pay you, so almost the entire year's tax has to be paid by you, in advance.

The Income-tax Act, 2025 replaces the 1961 Act from 1 April 2026 and renumbers sections; the advance tax rules, dates and interest are carried over unchanged. This guide uses the section numbers that forms, portals and CAs still refer to; check the latest notification for the new references.

The four instalments

Section 211 fixes the schedule. Each percentage is of the total estimated advance tax for the year, and each is cumulative, so what you pay on a date is the cumulative percentage minus what you have already paid.

If a due date falls on a Sunday or bank holiday, payment on the next working day is accepted. Anything paid after 15 March but by 31 March is still advance tax under Section 211(4), which matters for the Section 234B test.

Presumptive taxpayers under Section 44AD (businesses) and 44ADA (professionals) get the single 15 March instalment under the proviso to Section 211(1). If you are on presumptive for your shop but also have rental income and capital gains, the relaxation technically applies only to the presumptive income; in practice most CAs compute the whole liability and pay by 15 March, accepting a small 234C charge on the other income if any. Read the presumptive taxation guide for who qualifies.

Computing advance tax from projected profit

The calculation is the same as your annual tax return, done early and on estimates. Work through it in June and then refine each quarter.

1. Estimate business profit for the full year. For a trading business, projected sales minus purchases, expenses, depreciation and interest. For 44AD, 8% of projected turnover (6% for digital receipts); for 44ADA, 50% of gross receipts.
2. Add other income: interest on deposits, rent, capital gains, a partner's remuneration and interest from the firm, salary if you also have a job.
3. Subtract deductions if you are on the old regime (80C, 80D, home loan interest, and so on). Under the default new regime, only a few deductions survive, mainly employer NPS contributions; there is no standard deduction on business income.
4. Apply the slab rates for the regime you will use in the return, then add 4% cess. Firms and LLPs pay a flat 30% plus cess; companies 25% or 22% depending on the section they opt for.
5. Subtract TDS and TCS you expect others to deduct on your income during the year: 194J or 194C by clients, 194A on interest, 194H on commission, TCS on some purchases.
6. If the result is ₹10,000 or more, that is your advance tax. Apply the instalment percentages.

The hardest input is profit, because your books lag. Use last year's profit margin on this year's sales run-rate as a starting point, and a working set of books, even simple ones, so that by September you have actual figures for five months. The profit and loss statement guide shows how to build a quick quarterly P&L from sales, purchases and expenses.

Interest under Sections 234B and 234C

Two separate interest charges apply, and you can owe both.

Section 234C is for missing or short-paying an instalment. It is simple interest at 1% a month, charged on the shortfall for each instalment: three months each for the June, September and December shortfalls, and one month for March. The shortfall is measured against the cumulative percentage due on that date. Two reliefs: no interest for the June instalment if you paid at least 12% by 15 June, and none for September if you paid at least 36% by 15 September. Presumptive taxpayers pay 1% for one month on any shortfall as of 15 March. Income that could not be estimated (capital gains, dividends, lottery winnings) is excluded if the tax on it is paid with the next instalment.

Section 234B is for not paying enough during the year overall. If the advance tax you paid by 31 March is less than 90% of the assessed tax (tax after TDS), interest runs at 1% a month on the shortfall from 1 April until you pay the balance as self-assessment tax or the assessment is completed. Pay the balance with your return in July and you owe four months of 234B; delay to a belated return in December and it is nine months.

The rates are modest, which tempts owners to treat 234B and 234C as a cheap loan. They are not deductible as a business expense, and a pattern of paying nothing in advance invites scrutiny, so pay at least the 12% and 36% safe harbours in the first two instalments.

Paying online with Challan 280

Advance tax is paid through the e-Pay Tax service on the income tax portal (incometax.gov.in) using Challan No. ITNS 280. You do not need to log in; the "e-Pay Tax" link on the home page accepts your PAN and mobile number.

1. Select the assessment year. For FY 2026-27 income, the assessment year is 2027-28. Getting this wrong is the most common challan error and takes weeks to correct through your assessing officer.
2. Choose "Income Tax (Other than Companies)" (major head 0021) for individuals, HUFs and firms, or "Corporation Tax" (0020) for a company.
3. Choose type of payment "Advance Tax (100)". Self-assessment tax paid with the return is code 300; do not mix them.
4. Enter the amount under "Tax". Cess and interest boxes are for when the portal splits them; for advance tax, enter the full amount including cess in the tax box unless your CA advises otherwise.
5. Pay by net banking, debit card, UPI, RTGS or NEFT (the portal generates a mandate form), or over the counter at an authorised bank branch with the printed challan. Cash over ₹10,000 is not accepted at the counter.
6. Download the challan receipt showing the BSR code, challan serial number and date. Save it; you will enter these details in the return's tax payments schedule, though the portal now pre-fills them from Form 26AS.

Check Form 26AS or AIS after a few days to confirm the credit against your PAN.

Worked example: a Surat textile trader keeping books

A Surat textile trader (proprietor, keeps full books, new regime) projects FY 2026-27 sales of ₹2.4 crore and, based on last year's 7.5% net margin, a profit of ₹18,00,000 after depreciation and interest. He also expects ₹1,00,000 interest on fixed deposits, on which the bank will deduct TDS of ₹10,000 under 194A.

• Total income: ₹18,00,000 + ₹1,00,000 = ₹19,00,000
• Tax (new regime): 5% on ₹4,00,000 = ₹20,000; 10% on ₹4,00,000 = ₹40,000; 15% on ₹4,00,000 = ₹60,000; 20% on ₹3,00,000 = ₹60,000. Total ₹1,80,000.
• Cess 4%: ₹7,200. Total tax ₹1,87,200.
• Less TDS: ₹10,000. Advance tax payable: ₹1,77,200 (well above ₹10,000).

Suppose he forgets the June instalment and pays ₹79,740 on 15 September. Section 234C interest on June: ₹26,580 × 1% × 3 months = ₹797 (rounded). Small, but it appears in the return computation and must be paid.

In December, a slow Diwali season makes him revise projected profit down to ₹16,00,000. Revised tax: ₹1,80,000 minus 20% on ₹2,00,000 (₹40,000) = ₹1,40,000, plus cess ₹5,600 = ₹1,45,600, minus TDS ₹10,000 = ₹1,35,600. He has paid ₹79,740; 75% of the revised figure is ₹1,01,700, so the December instalment drops to ₹21,960. He revises the estimate again in March from the actual books. This is exactly how the instalments are meant to work: each date is a fresh estimate, not a promise made in June.

A presumptive example: a Pune freelance designer

A Pune freelance designer on Section 44ADA expects gross receipts of ₹30,00,000 in FY 2026-27. Deemed income is 50%, ₹15,00,000. Tax (new regime): ₹20,000 + ₹40,000 + 15% on ₹3,00,000 (₹45,000) = ₹1,05,000; cess ₹4,200; total ₹1,09,200. Business clients deduct 10% TDS under 194J on the ₹8,00,000 they pay her (₹80,000); the rest of her clients are individuals and foreign companies who deduct nothing. Advance tax = ₹1,09,200 minus ₹80,000 = ₹29,200, payable in one instalment by 15 March 2027. If she pays it on 25 March, 234C is ₹292 for one month, and 234B is nil because she has paid 100% by 31 March.

A quarterly routine that keeps you out of trouble

• First week of June: pull sales and purchases for April and May, project the year, compute tax, pay 15% by the 15th. Round up rather than down.
• First week of September: update with five months of actuals and the bank statement; pay up to 45%.
• First week of December: update again, adjust for festival season results, pay up to 75%.
• First week of March: work from near-final books; pay the balance to 100%. Presumptive payers do everything in this one step, but the June and September estimates are still worth doing so that cash is set aside.
• After each payment: file the challan receipt, check 26AS, and note the amount in your compliance calendar with the GST and TDS dates (see the small business compliance calendar).

Set aside tax money as you earn it. A separate savings account that receives 10% to 15% of every collection is the simplest way to make sure the September instalment does not compete with a supplier payment.

Common mistakes

• Assuming advance tax is only for companies or "big" businesses. The threshold is ₹10,000 of tax, roughly ₹4,50,000 of taxable income under the new regime for an individual.
• Paying under the wrong assessment year or with type of payment 300 instead of 100.
• Forgetting cess in the estimate, which leaves you a few percent short of 90% and triggers 234B on the whole shortfall.
• Ignoring the instalments because "the CA will sort it out in July". By then 234B has been running for four months.
• Counting TDS you expect but that clients never actually deduct. Check 26AS in September and December.
• Treating GST turnover as profit. Advance tax is on income after expenses, not on collections.
• Paying from a personal account without recording it in the business books, so the challan is never matched to the return.

How VyaparKit helps

Advance tax starts with a fair estimate of profit, and VyaparKit gives you the numbers to build one. The customer ledger totals your invoiced sales per customer, purchase bills record what you bought with GST split out, and bank statement to Excel converts the bank PDF into a sheet you can total by quarter. The simple interest calculator gives a quick 1% a month figure when you want to see what a missed instalment costs. VyaparKit does not compute or file income tax; the estimate and the challan are yours or your CA's.

Next steps

• Check whether your estimated tax after TDS for FY 2026-27 is ₹10,000 or more; if so, you are an advance tax payer.
• Put 15 June, 15 September, 15 December and 15 March in your calendar (only 15 March if you are on 44AD or 44ADA).
• Build a simple quarterly profit estimate from sales, purchases and expenses and update it before each date.
• Pay through e-Pay Tax with Challan 280, assessment year 2027-28, code 100, and confirm in Form 26AS.
• Keep the challans for your return; see ITR forms for business owners for what happens next.