Advance Tax Deadline Alert: Are You Paying the Right Amount?

Pranshu Kumar
Mar 8
4 min read

The March 31st advance tax deadline is approaching! If your estimated tax liability for the financial year exceeds ₹10,000, you are required to pay advance tax to avoid interest and penalties under Sections 234B & 234C of the Income Tax Act.

Failure to pay advance tax on time may result in a 1% monthly interest charge, increasing your overall tax liability.

In this guide, we will cover everything you need to know about advance tax, including how to calculate it, when to pay, and how to avoid penalties.

Who Needs to Pay Advance Tax?

Advance tax is applicable if your total tax liability for the financial year exceeds ₹10,000 after considering TDS (Tax Deducted at Source). It applies to:

Salaried individuals with additional income (such as rent, capital gains, interest, or freelancing income).
Self-employed professionals & freelancers (who do not have TDS deducted on their earnings).
Business owners (who have a tax liability exceeding ₹10,000 after adjusting for TDS).
Investors & traders (who earn capital gains or speculative income, such as intraday trading profits).

Who is Exempt from Advance Tax?

Senior citizens (aged 60+) who do not have business income.
Taxpayers whose total tax liability after TDS deductions is less than ₹10,000.

How to Calculate Advance Tax?

To determine your advance tax liability, follow these steps:

Step 1: Estimate Your Taxable Income

Include all sources of income, such as:

Salary income
Business or freelancing income
Rental income
Capital gains (from stocks, mutual funds, or property sales)
Interest income (from bank deposits, bonds, etc.)

Step 2: Deduct Eligible Expenses & Deductions

Reduce your taxable income by claiming deductions under applicable sections, such as:

Section 80C – Investments in PPF, ELSS, EPF, Life Insurance, etc. (up to ₹1.5 lakh).
Section 80D – Health insurance premiums.
Section 80G – Donations to approved charitable institutions.
HRA, Standard Deduction, and Other Exemptions applicable to salaried individuals.

Step 3: Compute Your Tax Liability

Use the applicable income tax slabs to calculate your total tax liability.

For example, under the new tax regime for FY 2023-24:

₹0 – ₹3 lakh: No tax
₹3 – ₹6 lakh: 5%
₹6 – ₹9 lakh: 10%
₹9 – ₹12 lakh: 15%
₹12 – ₹15 lakh: 20%
Above ₹15 lakh: 30%

Add applicable cess (4%) to get the final tax payable.

Step 4: Adjust for TDS Paid

If TDS has already been deducted on your income (e.g., salary or fixed deposit interest), subtract the TDS amount from your total tax liability.

Step 5: Pay the Remaining Tax as Advance Tax

If the balance tax payable exceeds ₹10,000, pay the due amount before March 31st.

Advance Tax Payment Schedule

For non-business taxpayers (salaried, freelancers, investors), advance tax is paid in one installment by March 31st.

For businesses under the presumptive taxation scheme (Section 44AD/44ADA), the entire advance tax amount must also be paid by March 31st.

For other taxpayers (business owners not under presumptive taxation), the schedule is:

Due Date	Advance Tax Payable
June 15	15% of total tax liability
September 15	45% of total tax liability
December 15	75% of total tax liability
March 15	100% of total tax liability

If you have missed earlier installments, you must pay the full balance amount before March 31st.

How to Pay Advance Tax Online?

Advance tax payments can be made online through the Income Tax e-Filing Portal. Follow these steps:

Visit the Income Tax e-Payment Portal: https://www.incometax.gov.in
Select "Challan 280" – This is used for self-assessment and advance tax payments.
Enter your PAN and assessment year (AY 2024-25 for income earned in FY 2023-24).
Choose "Advance Tax (100)" as the tax type.
Enter the payment amount based on your tax calculation.
Select payment mode (Net Banking, Debit Card, UPI, etc.).
Complete the transaction and save the Challan 280 receipt for reference.

Penalty for Missing Advance Tax Payment

If you fail to pay advance tax on time, you will be charged interest under:

Section 234B: If 90% of total tax liability is not paid by March 31st, interest at 1% per month is charged until full payment is made.
Section 234C: If advance tax is not paid as per the prescribed schedule, 1% per month interest is levied on shortfall amounts.

These penalties can significantly increase your tax burden, so timely payment is crucial.

Final Checklist Before March 31st

✅ Have you calculated your total taxable income from all sources? ✅ Have you deducted eligible exemptions & deductions (80C, 80D, etc.)? ✅ Have you adjusted TDS paid from your tax liability? ✅ Have you checked if your remaining tax due is above ₹10,000? ✅ Have you made the advance tax payment online via Challan 280?

By following these steps, you can avoid interest penalties and ensure compliance with advance tax rules.

Conclusion

Advance tax payments are essential for taxpayers with a liability exceeding ₹10,000. By estimating your taxable income, applying deductions, and making timely payments, you can avoid penalties and manage your tax obligations efficiently.