TaxSaral

Sections 403–408 · was Sections 207–211 in the 1961 Act

Advance Tax — Obligation and Instalments

If net tax liability (after TDS) exceeds ₹10,000, you must pay advance tax in four instalments: 15% by June 15; 45% by September 15; 75% by December 15; 100% by March 15.

Who it applies to: Self-employed individuals, freelancers, investors, and salaried people with large non-salary income where TDS doesn't cover the full liability.

Key points

  • The ₹10,000 threshold is on 'net tax liability after TDS' — if your employer deducts sufficient TDS, you may owe nothing.
  • Percentages are cumulative: 45% by September means total paid (including June) must be 45%.
  • Missing or underpaying an instalment attracts interest under Section 425 (3 months per missed instalment).
  • Paying less than 90% of the total tax as advance tax attracts Section 424 interest from April 1 of the assessment year.

Worked example

Freelancer estimating and paying advance tax

Suchitra is a freelance designer. She estimates her TY 2026-27 tax liability at ₹1,80,000 after accounting for client TDS deductions of ₹20,000. Net advance tax needed = ₹1,80,000 – ₹20,000 = ₹1,60,000.

Total advance tax: ₹1,60,000

Instalment schedule:
  By June 15, 2026:      15% = ₹24,000
  By September 15, 2026: 45% = ₹72,000 (cumulative)
  By December 15, 2026:  75% = ₹1,20,000 (cumulative)
  By March 15, 2027:    100% = ₹1,60,000 (cumulative)

Amounts due each period:
  Jun 15: ₹24,000
  Sep 15: ₹48,000
  Dec 15: ₹48,000
  Mar 15: ₹40,000

Result: Suchitra pays in four tranches. If she misses the June instalment and pays ₹72,000 in September instead (entire first and second instalment together), she owes Section 425 interest on the June shortfall for 3 months.

Related sections

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Section references are based on the Income Tax Act 2025 (Tax Year 2026-27). Examples are illustrative; verify with a Chartered Accountant before filing.