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Advance Tax Under New Income Tax Act 2025

What Is Advance Tax?

Advance tax is your estimated income tax paid in instalments during the financial year, instead of a lump sum at the end. It helps you spread your tax liability and avoid last-minute pressure.

Who Needs to Pay?

If your total tax liability exceeds ₹10,000 (after TDS), you must pay advance tax. This applies to:

• Salaried individuals with additional income 
• Freelancers and consultants 
• Business owners and startups 
• Investors earning capital gains 

👉 Senior citizens (60+) are exempt only if they do not have business or professional income.

📍 Example:
Mr. Raj, working in OMR, earns ₹18 lakhs salary and ₹3 lakhs rental income. While TDS covers his salary, the rental income creates additional tax liability. If it exceeds ₹10,000, advance tax becomes applicable.

When Should You Pay?

Advance tax is paid in four instalments:

• 15 June – at least 15% of your estimated total tax
• 15 September – at least 45% cumulatively
• 15 December – at least 75% cumulatively
• 15 March – the full 100%

👉 If you opt for the Presumptive Taxation Scheme under Section 44AD or 44ADA, you can skip the quarterly payments and pay 100% in one go by 15 March.

📍 Example (Chennai):
Ms. Priya, a digital marketer in T Nagar, opts for Section 44ADA. She declares 50% of her ₹20 lakh income and can pay her advance tax in one instalment.

What If You Miss It?

Delay or short payment attracts interest:

• Section 234B – 1% per month on shortfall if your advance tax paid is less than 90% of your total assessed tax.
• Section 234C – 1% per month for missed instalments 

📍 Example (Chennai):
Ms. Meena, a boutique owner in Nungambakkam, delays her tax payment and ends up paying additional interest on ₹80,000 — an avoidable cost.

Key Takeaway

Advance tax is simple — plan early, pay on time, and avoid penalties.

📌 Coming in Part 2: Smart advance tax planning tips — specific to the new tax regime in 2025.

Follow us for Part 2, and feel free to reach out if you have questions about your advance tax obligations.

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