Advance tax under Income Tax Act, 2025: Who needs to pay, deadlines and how to calculate it

Advance tax is the system of paying income tax during the tax year instead of waiting until the end of the year. Under the Income Tax Act, 2025, taxpayers whose estimated tax liability after adjusting TDS is ₹10,000 or more shall pay advance tax in instalments.

The new act came into force on 1 April 2026, and applies to income earned and tax payments made for Tax Year 2026–27 and onwards.

Here are the key rules taxpayers should know.

Who is required to pay advance tax?

Any taxpayer, including an individual, firm, or company, whose estimated tax liability for the tax year is ₹10,000 or more after adjusting TDS is required to pay advance tax.

However, individuals earning only salary income do not need to pay advance tax because their employer deducts TDS.

Who is exempt from paying advance tax?

A resident senior citizen aged 60 years or above is not required to pay advance tax if they do not have income from business or profession.

What are the advance tax payment deadlines?

For taxpayers other than those covered under the specified presumptive taxation scheme, advance tax is payable in instalments:

• By 15 June: 15% of total advance tax
• By 15 September: 45%
• By 15 December 15: 75%
• By 15 March: 100%

Taxpayers opting for the presumptive taxation scheme have to pay 100% of their advance tax by 15 March.

How is advance tax calculated?

A taxpayer should first estimate total income for the year, including salary, house property, business or professional income, capital gains, and other sources.

The broad calculation is:

• Add total income from all sources.
• Subtract eligible deductions and applicable rebate.
• Calculate income tax based on the selected regime.
• Add surcharge, if applicable, and 4% health and education cess.
• Subtract eligible tax reliefs.
• Subtract TDS, TCS, and advance tax already paid, along with eligible MAT/AMT credit.
• The remaining amount is the advance tax liability.

What if income changes during the year?

Taxpayers can revise their income estimate during the year. If income increases after the first or second instalment, they can adjust the remaining instalments and pay advance tax according to the revised estimate.

There is generally no requirement to separately submit the revised income estimate to the tax department merely because the estimate has changed.

How are capital gains treated for advance tax?

Capital gains are also included while calculating advance tax. However, it may not always be possible to know about such gains in advance.

If capital gains arise after an instalment’s due date, the tax on those gains can be paid through the remaining instalments.

Can advance tax be paid from someone else’s bank account?

Yes. Advance tax can be paid from another person’s bank account. However, the challan must clearly mention the PAN of the taxpayer on whose behalf the payment is being made.

When does advance tax appear in Form 26AS?

Advance tax paid is generally reflected in Form 26AS after the bank uploads the payment details. The tax department’s guidance states that this can take around 3-4 working days after payment.

What details should be checked while making the payment?

Before confirming the payment, taxpayers should check:

• PAN
• Tax year
• Correct tax-payment head
• Type of payment, such as advance tax
• Tax amount, including applicable surcharge and cess

Is advance tax an expense?

No. Advance tax is not treated as a business expense. It is treated as a tax payment or asset and is adjusted against the taxpayer’s final tax liability.

Disclaimer: This is only for informational and educational purposes. Please consult a qualified expert for the latest laws and regulations.