What is advance tax?
Advance tax means paying income tax during the year you earn the income, in instalments, instead of in one go after the year ends. "Pay as you earn", in other words.
For most salaried people, TDS already does this, so they never pay advance tax. It matters most for freelancers, consultants, business owners, landlords, investors with capital gains, and employees with significant other income such as interest or rent.
Who has to pay advance tax
- Anyone whose tax for the year, after subtracting TDS/TCS, is ₹10,000 or more.
- Exception: a resident senior citizen (60 or older) who has no income from business or profession doesn't have to pay advance tax at all.
- Presumptive taxpayers under sections 44AD and 44ADA (small businesses and professionals) may pay the whole amount in one instalment by 15 March.
Advance tax due dates for 2026-27
| Due date | Cumulative amount to have paid |
|---|---|
| 15 June 2026 | 15% of the year's tax |
| 15 September 2026 | 45% |
| 15 December 2026 | 75% |
| 15 March 2027 | 100% |
Income you couldn't have foreseen, like capital gains from a sale or a lottery win, only needs to be covered in the instalments due after you receive it.
Worked example: a freelancer in 2026-27
Priya is a freelance designer. She expects taxable income of ₹18 lakh for 2026-27 and uses the new tax regime.
| Step | Amount |
|---|---|
| Tax on ₹18 lakh at new-regime slabs (₹0 + ₹20,000 + ₹40,000 + ₹60,000 + ₹40,000) | ₹1,60,000 |
| Add 4% health and education cess | ₹1,66,400 |
| Less TDS her clients deduct (10% on ₹6 lakh of fees) | – ₹60,000 |
| Advance tax for the year | ₹1,06,400 |
Her instalments:
| By | Cumulative | Pay now |
|---|---|---|
15 June | ₹15,960 | ₹15,960 |
15 September | ₹47,880 | ₹31,920 |
15 December | ₹79,800 | ₹31,920 |
15 March | ₹1,06,400 | ₹26,600 |
If her income grows mid-year, she simply increases the next instalment. Check your own numbers with our income tax calculator.
Special situations
- Salaried with other income: if rent, interest or capital gains push your unpaid tax to ₹10,000 or more, either pay advance tax or ask your employer to deduct extra TDS. Declaring the other income to your employer is often the easiest route.
- Capital gains from selling shares or property: you can't predict these, so pay tax on the gain in the instalments due after the sale. A sale in October is covered from the 15 December instalment onwards.
- Dividends: the same rule applies. Include them from the next instalment after you receive them.
- NRIs: advance tax applies to Indian income that isn't fully covered by TDS, such as rent from Indian property where the tenant didn't deduct enough.
- A loss-making first quarter: the instalments are cumulative, so you can catch up in later quarters. Interest is only for the shortfall at each date.
Interest if you pay late or too little
- Missed or short instalments: interest of 1% a month on the shortfall for each instalment. This is section 425 of the Income-tax Act, 2025 for 2026-27, formerly section 234C.
- Less than 90% paid by 31 March: interest of 1% a month on the unpaid tax from April until you pay. This is section 424, formerly 234B.
The interest is calculated when you file and is payable with your self-assessment tax. On the example above, missing all four instalments would cost Priya several thousand rupees in interest, which is avoidable.
How to pay
Advance tax is paid online through e-Pay Tax on the income tax portal. Follow our step-by-step guide to paying advance tax online, and make sure you pick the right year and the "Advance Tax" payment type.
Prefer not to track instalments yourself? TaxQue's income tax filing team estimates your advance tax each quarter and files your return at year end. Freelancers and professionals can also look at presumptive taxation with ITR-4, which allows a single payment by 15 March.
