Advance tax is the government's way of saying: do not save the whole bill for July. If you will owe more than Rs 10,000 in tax beyond your TDS, you are supposed to pay as you earn, through the year.
Who actually needs to bother
Salaried people rarely do, because employer TDS covers them. Advance tax mainly touches freelancers and business owners, people with big capital gains, and anyone with large interest, dividend or rental income that nobody deducts tax on. Resident senior citizens with no business income are fully exempt.
The instalment calendar
- ✓By 15 June: 15% of the year's estimated tax
- ✓By 15 September: 45% cumulative
- ✓By 15 December: 75% cumulative
- ✓By 15 March: 100%
Presumptive scheme filers under 44AD and 44ADA get a friendlier deal: one payment of the full amount by 15 March.
What missing it costs
Interest under Sections 234B and 234C, roughly 1% a month on the shortfall. Not ruinous, but a completely avoidable leak. Estimating is allowed to be imperfect: pay on a fair estimate each quarter and adjust in later instalments as the year becomes clearer.
Paying is done through the e-Pay Tax facility on the income tax portal in a few minutes. When you file with Saathi.Tax, every advance tax challan you paid gets credited against your final bill automatically.
